Marxism takes the long view of history. There are certain moments in history that are decisive turning points. Such moments were 1789, 1917, 1929. At such times the whole process is accelerated, and processes that seemed to be fixed for all time turn into their opposite. To this list of great historical turning points we must now add the year 2008. The new period that opened with the crisis of 2008 finds its reflection in an intensification of the class struggle, and in relations between states, by wars and international conflicts.

Dialectics deals with processes in their development through contradictions. The dialectical method enables us to look beyond the immediately given (the “facts”) and observe the deep-seated processes that lie beneath the surface. The capitalist system historically produces and destroys its internal equilibrium. This is manifested at intervals in the outbreak of crises. In the economic sphere this is expressed in the alternation between booms and slumps, which are a fundamental characteristic of the capitalist system for the last 200 years. Periods of prosperity and full employment are followed by periods of slump in which investment falls off, factories are closed, unemployment soars and the productive forces stagnate.

Marx explains that the fundamental cause of all real capitalist crises is overproduction, or, in the jargon of the modern economists, excess capacity (which is the result of overproduction of the means of production). The fact that society is plunged into crisis because it produces too much is a feature of capitalism that was unknown in previous societies. It is the fundamental contradiction of capitalism, which cannot be resolved within the limits of private property of the means of production and the nation state. For what appeared to be a long period—approximately three decades, this seemed to have been falsified by history.

The collapse of Stalinism was an important turning point. From a psychological point of view it gave the bourgeoisie and its ideological defenders a new lease of life. It further impelled the Social Democracy towards the camp of capitalism, creating new illusions in the “free market economy”. It set the final seal on the former Stalinist parties, which abandoned any pretence of standing for socialism and became a pale reflection of the Social Democracy. The same process led to the virtual collapse of left reformism as a definite tendency in the labour movement.

During the last boom, capitalism went beyond its natural limits through the unprecedented expansion of credit and the intensification of the world division of labour through so-called globalization. The growth of world trade propelled the system upwards in what appeared to be an unending spiral of growth. The expansion of credit temporarily increased demand. In the case of Britain, the size of private credit, as a proportion of GDP, has doubled to 200% in the last 50 years. The USA and other countries went down the same road.

The sun shone, the markets boomed and everybody was happy. Everything seemed to be for the best in the best of all capitalist worlds. Then came the crash of 2008. With the collapse of Lehman Brothers, they came very close to a catastrophe on the scale of 1929—or even greater. They were only saved by massive injection of public money. The whole burden of debt accumulated by the private banks was placed on the shoulders of the taxpayers. The state—which the economists insisted had no role to play in the economy—had to prop up the whole crumbling edifice of the “free market economy”.

The crisis continues

Since 2008, all the factors that drove the system upwards have combined to drive it downwards. The massive increase in credit has become a huge mountain of debt, a colossal burden on consumption, which is dragging the economy down under its weight.

While the press and politicians talk about a recovery, the serious strategists of capital are plunged into the blackest pessimism. The more far-sighted economists are talking not of recovery but of the danger of a new and even deeper crisis. The “recovery” is really a convenient fiction, calculated to soothe the nerves of investors and restore “confidence”.

Insofar as it is possible to speak of it, the partial recovery in the USA is the weakest recovery from a slump in history. Normally after a slump, the economy tends to rebound strongly on the basis of productive investment, which is the lifeblood of the capitalist system. But this is not the case now. According to the IMF, the world economy is on track to grow just 2.9%, which is roughly half its pre-crisis level.

The irrational nature of capitalism, trapped in the vice of insoluble contradictions, has been given an even sharper and more painful and destructive character through globalization. “National sovereignty” has become an empty word, as every government is subjected to the vicissitudes of the world market.

Speculation flourishes despite all the talk about regulation. A vast amount of money is sloshing around the world, adding hugely to the danger of an unprecedented economic collapse. The global derivatives market, which amounted to $59 trillion in 2008, had risen to $67 trillion by 2012. This is a measure of the unbridled speculative frenzy that has gripped the bourgeois in our times. The tangled interconnections of the derivatives market, which it seems nobody truly understands, have introduced complex and new risks.

The nervousness of the bourgeois is mirrored in the feverish rise and fall of the markets. The slightest incident can cause a panic: political tensions in Portugal; social unrest in Egypt; uncertainty over the outlook for China’s economy; the possibility of military action in the Middle East leading to a sharp rise in oil prices; any of these things can cause a panic that can plunge the world economy back into a deep recession. The yields on government debt play approximately the same role as the charts on the bottom of a hospital bed that denote the rise and fall of a fever. Beyond a certain limit, the increase in the level of a fever threatens the patient with death.

The lifeblood of capitalism

The most serious problem is the lack of productive investment. In the US, private investment remains below even its long-term share of national output, while public investment peaked with the stimulus in 2010 and has been falling ever since. The capitalists are not investing in the kind of productive activity that would lead to the hiring of American workers in sufficient numbers to allow the economy to take off. The reason is because there is no market for their goods; that is to say, there is no “effective demand”.

The economic outlook is dark and uncertain. Nobody wants to spend or invest because they cannot predict the future. The number of jobs increased in 2013 but factory employment continued to decline. Initial forecasts that the US recovery would be led by a manufacturing rebound have been comprehensively falsified. A healthy and sustainable recovery must be based on productive investment, not a larger number flipping burgers in McDonald’s.

The costs of investment are actually far lower now than in 2008. Yet business investment in the US is running at only slightly above its 2008 level. A recent survey of the 40 biggest publicly traded US companies recorded that roughly half of them intended to curtail their capital expenditures in the course of 2013. What is the point in building new factories and investing in costly new machinery and computers when they cannot use the productive capacity they already have?

In the UK, a mere 15% of total financial flows actually go into investment. The rest goes into supporting existing corporate assets, real estate, or unsecured personal finance. Instead of investing in new plant and machinery, the big companies are borrowing large sums of money at negligible rates of interest in order to buy back their own shares. In the first nine months of 2013 alone, $308 billion was spent for this purpose in the USA.

The problem is therefore not lack of liquidity. In the USA, businesses are awash with cash yet they do not invest in productive activity. In the last four years vast sums of money have been pumped into the economy, particularly the banks. The result has been to increase the public debt to alarming levels, without producing any economic recovery worthy of the name. Yet Moody's estimate at the beginning of 2013 (reported by Forbes in March 2013) was of $1.45 trillion in cash stashed away by US non-financial corporations. The increase for the year 2012 alone (included in the total) was of $130 billion. This is not a new phenomenon. In the late 1920s, there was a massive accumulation of unspent cash in the economy—just before the crash.

The bourgeois economists have an aversion to pronouncing the word “overproduction” (strangely, some self-styled Marxist economists suffer from the same affliction). But from a Marxist point of view the root cause of the crisis is very clear. Surplus value is extracted in the process of production, but this does not exhaust the process of money-making. The ability of the capitalist to realise the surplus value extracted from the labour of the workers ultimately depends on his ability to sell his commodities on the market. But this possibility is limited by the level of effective demand in society, that is, by the ability to pay.

The capitalists’ urge to produce in order to obtain profit is virtually unlimited, but his ability to find a market for his produce has very definite limits. The world economy is perilously dependent upon the USA. In reality, the whole world now depends on US consumption. But consumption in the USA is hardly in an ideal condition to act as the engine of world growth. Median earnings have fallen by 5.4 per cent since the US recovery began. Unemployment hovers around 7 per cent. Consumption accounts for roughly 70 per cent of US gross domestic product and about 16 per cent of global demand. Exporters everywhere are thus hoping the US consumer will come to the rescue.

But this creates new contradictions. Last year, surging imports pushed the US trade deficit up by 12 per cent to $45bn per month, which was the largest jump in five years. Imports from China accounted for almost two-thirds of that. If this continues, the US-China deficit will exceed $300bn. On the other hand, US exports fell. Obama’s goal of doubling exports in five years is a hopeless dream. The US recovery might peter out, dragging the global economy down with it.This resembles the old Russian fairy tale of a hut supported by chickens’ legs.

Quantitative easing

The so-called recovery is based on several factors, such as relocation of industries back from China to the USA, the defence and aerospace industry and quantitative easing, with the injection of huge quantities of fictitious capital into the economy of the United States and other countries. Like a terminally ill patient, capitalism is being kept alive by a continuous blood transfusion of public money. The Central Banks are compelled to rely on so-called quantitative easing—or in plain language—printing money. QE and zero interest rates have failed to produce serious results and have clearly inflationary implications.

The relative improvement of the US economy was due in no small measure to the loose monetary policies that were carried out by the Federal Reserve. Since 2009, the Federal Reserve has been buying financial assets—US Treasury bonds and some types of corporate debt. Through an expansion of the monetary base, they kept interest rates low, which served to prop up indebted businesses and households. This has been the major factor in the so-called recovery, and it is propping up the financial markets as crutches support a man with no legs.

The capitalist system is based on the economics of the madhouse. In their greed to make quick profits from speculation the bourgeois only succeeded in creating gigantic asset price inflation in the twenty years prior to the crash of 2008. This was brought about by the Federal Reserve’s policy of holding down interest rates. The same insane policy is now being pursued in a desperate attempt to reflate the bubble. They seem to have forgotten that this very policy was what led to the collapse in the first place. It seems as if the bourgeoisie has taken leave of its senses. But as Lenin once said: “A man on the edge of a cliff does not reason.”

The Federal Reserve’s quantitative easing programme amounts to $85bn per month. The UK, the Eurozone and, most particularly, Japan, are all slavishly copying Bernanke’s long-term promise of easy money. Paradoxically, this is just when he is attempting to back away from it. Bernanke therefore found himself in a very delicate balance. He tried to signal the beginning of the end of zero interest rates without triggering a panic.

Those who are engaged in this activity are well aware that they are performing a dangerous experiment. They have known this for some time. Fred Neumann, chief Asia economist at HSBC explained that QE “buys us time but it does not solve anything fundamentally.” (FT, 20/9/13) “The longer they continue in this process the worse it gets for our ability to pull out of the slump”, said Mike Crapo, Republican on Senate banking committee.

Moreover, experience shows that this policy is subject to the law of diminishing returns: ever bigger quantities of money are required to obtain ever more meagre results. Gillian Tett, Financial Times chief columnist states: “one way to interpret this week's dance around QE is that policy makers are continuing to prop up a financial system that is (at best) peculiar and (at worst) unstable”. We are “in a world where asset prices and animal spirits are now dependent on cheap money”.

The Financial Times pronounced its verdict on QE in the US in an editorial (21/9/13):

“Although QE has lifted spirits, its effect has been more muted than some had hoped. Despite low funding costs, investment is in the doldrums. Governments are cutting deficits, households are repaying debt, and corporations are piling up cash. Consequently, the money created by the Fed is not funding activity such as house building or capital investment, which would contribute directly to growth. Instead, it is lifting the value of existing assets.”

The housing finance agencies Fannie Mae and Freddie Mac remain as before, pumping credit into the mortgage market. But while before the crisis they controlled 60% on the mortgage market in the US, now they control 90%. This kind of thing was what ended in the collapse of 2008. Conscious of the dangers involved, Bernanke, cautiously announced last June that the Fed might be phasing out QE. The Keynesians, led by Paul Krugman, were horrified. They warned that it was a premature move that would send the wrong signal to the world economy, that the central banks would tighten before the private sector recovery has achieved escape velocity. This is what happened in 1937-38.

Bernanke attempted to soften the blow by introducing all manner of “ifs” and “buts”. He stated that the Fed will end its asset purchases only if unemployment falls below 7 per cent—which it now has—reducing the risk of tightening before the economy can take it. Short-term interest rates would stay close to zero for a long time after that. Any rises would be gradual. And so on and so forth.

It was all to no avail. The bourgeoisie has become dependent on QE and cheap credit, just like a junkie who has become hooked on heroin and needs a regular dose to keep going. The announcement caused an immediate panic in the financial markets hedge funds began selling off bonds, causing a big drop in their prices. Borrowing costs (or “yields”) soared. By mid-September the Fed was forced to retreat. The markets rose again on hearing the decision of the Fed to leave the QE3 “punch bowl” in place, although new Fed chief Janet Yellen has now announced plans to taper it off to nothing by the end of 2014.

Crisis in the USA

In 2009, two weeks after entering the White House, Obama made a speech in which he said: “We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity—a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad”.

Four years later, the US is still building on foundations of sand, preparing the ground for a future crisis. This is reflected in the staggering figure for the nation’s accumulated debts. The precarious nature of the situation was shown by the US government shutdown, which threatened to drag the USA and the world economy as a whole into free-fall. US government debt reached the astounding figure of $16.7 trillion, which is the limit agreed by Congress.

The severity of the crisis is shown by an open split in the US ruling class and its political representatives. In the boom period, the two parties of capital, broadly representing two different wings of US capitalism, could bargain their way to a compromise on most issues. Now, when the cupboard is bare, the old political set up becomes a complete fetter on the further development of society and the capitalist system, with disastrous consequences.

The need to increase the US debt limit brought this split to a crisis point. Failure to do so would have meant pushing the USA into default. This would have provoked an estimated 6.8 percent drop in US GDP and five million job losses in the OECD. Yet the right-wing “Tea Party” Republicans in Congress, propelled by their hatred of Obama, Obamacare, and their narrow-minded obsession with deficit reduction, were quite prepared to bring the US and the world economy crashing down.

The Keynesians point out, that reducing living standards in the middle of a recession will only deepen and prolong the slump. That is correct, as far as it goes. But the monetarists are equally correct in pointing out that the Keynesian policies of deficit financing are a recipe for inflation and will ultimately make a bad situation worse still.

In a capitalist economy there are few levers to pull on private investment when interest rates are close to zero and there is a massive public deficit. It is ironic that an economist like Jeff Sachs—the man who unleashed neo-liberalism onto East Europe—is now calling for a worldwide version of the New Deal. This is a reflection of the desperation of the bourgeoisie, which feels it is in an impasse. The ruling class is split over what action to take over the huge debt that is hanging over the US economy like a terrifying sword of Damocles.

The US government shutdown caused alarm in bourgeois circles internationally. The head of the World Bank, Jim Yong Kim, called it “a very dangerous moment… Inaction could result in interest rates rising, confidence falling and growth slowing”. The head of the IMF, Christine Lagarde, delivered an even clearer warning when she said that the stalemate in the US Congress threatened tipping the word into a new recession. The dollar began to slide against other countries as investors lost confidence.

The insane policy of sequestration led to cuts to investment in scientific research, education and infrastructure, actively reducing the very things that America needs more of in order to achieve a minimal reduction to the budget deficit. The Republican right demanded that Obama abandon his timid health reforms. The deadlock in Congress was a graphic expression of the split in the ruling class, which has been papered over but not resolved.

Another section of the bourgeois economists are now speaking in favour of moderating or abandoning austerity, protecting the poor, raising their skills, focusing the investment flow towards green energy, etc. This is intended to boost demand by increasing consumption. But such proposals immediately clash with the bitter resistance of the bosses, the Republicans and the monetarists.

This is a very risky policy, which some economists have compared with the situation facing Roosevelt in 1938, when Congress forced him to rein in stimulus, prompting a new downturn. As a matter of fact, it was not Roosevelt’s New Deal policies that ended the Great Depression but the Second World War. But this option is no longer possible at a time when the American President cannot even order a bombing raid on Syria.

In his 2009 speech, Obama chose not to mention what becomes of the house built on sand: “And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it”.

The crisis of Europe

The global nature of the crisis makes it impossible to “decouple” Europe and America. The announcement that the USA was going to wind down quantitative easing caused an immediate upheaval in the markets, which pushed up interest rates across the eurozone. The effect was to tighten monetary policy when the recession and rising unemployment required precisely the opposite policy.

Nowhere is the crisis revealed in starker terms than in Europe. All the dreams of the European bourgeoisie of a united capitalist Europe have rapidly been reduced to ashes. All the national contradictions have come to the surface, threatening the very future, not only of the euro, but of the European Union itself.

The weight of debt is like a gigantic millstone round the neck of the European economy, dragging it down and preventing a real recovery. Nobody knows the real extent of the debts of Europe’s banks. The bad loans of EU banks have reached at least €1.05 trillion (twice as much as in 2008) according to the Wall Street Journal. But this is only an estimate (i.e., a guess) and the real figure will be much greater. Most investment banks estimate that Europe’s banking sector must shrink by around €2 trillion to €2.5 trillion to reach a size that could be described as adequately capitalized.

There has been a sluggish recovery in Germany, but Italy and Spain remain in recession and Greece is in a deep slump. Italy has lost 9% of its GDP since the beginning of the crisis and Greece at least 25%. Nor will it be possible for Germany to maintain growth if there is no recovery in the eurozone as a whole, which is the main market for its exports. In 2012, European car sales fell to their lowest level since records began 24 years ago, in 1990. Car sales in Europe continued to fall in six of the first eight months of 2013.

The euro’s launch in 1999 was hailed as the key to a golden future of peace, prosperity and European integration. But as we predicted, under conditions of crisis it has become the source of national conflict and disintegration.

Although the euro is not the cause of the problems of countries like Greece, Italy and Spain, as narrow-minded nationalists imagine, it has undoubtedly exacerbated them to the nth degree.

In the past, these countries could find a solution to a crisis through devaluation. Now this is impossible. Instead of boosting their share of markets at the expense of foreign competitors by devaluing the currency, they are compelled to resort to “internal devaluation”, that is to say, savage austerity. But this only has the effect of deepening the slump and sharpening the class divisions in society.

The immediate catalyst was the Greek crisis, which threatens the euro and the European Union itself. It was natural that the crisis should emerge first in the weakest links in the chain of European capitalism. But the repercussions of the Greek crisis affect the whole of Europe. During the upswing that followed the launch of the euro, Germany gained a lot from exporting to the eurozone. What began as a tremendous plus has become a tremendous minus. When Mario Draghi, the European Central Bank president, promised that he would use all the economic resources at his disposal to save the euro, he forgot to say where these resources would come from.

In any fiscal transfer to save the eurozone, the transfer will always be of German taxpayers' money to somewhere else. This poses some serious problems for Angela Merkel. Germany has adopted the position of an implacable defender of austerity and fiscal restraint. It can afford to do so. It is the strongest of the European economies, and economic power must sooner or later be expressed as political power. Despite the illusions of the French bourgeoisie in the past, it is Germany that decides everything.

However, the politics of austerity has definite social and political limits. Countries like Greece and Portugal have already reached these limits, and Spain and Italy are not far behind. Despite the recent optimism of the bourgeoisie, nothing has been solved. The eurozone crisis can erupt again at any moment. The imposition of vicious austerity provoked a severe political crisis in Portugal, where huge mass protests almost led to the collapse of the government. Portugal’s public debt is rising, and is likely to be above 130 per cent of national output by 2015. So what was all the sacrifice and pain for?

Some sections of the "left" in Europe - for example Lafazanis, the leader of the left in SYRIZA - are calling for an exit from the Euro, and even from the EU itself, as a solution to the crisis and the problems of the working class. However, as Marxists we do not see the crisis as being due to the existence of the European Union. It is a crisis of the capitalist system.

The European Union is nothing more than a bosses' union aimed at bolstering the interests of the powerful European capitalists. The EU is imposing anti-working class policies everywhere. And this body cannot be reformed into some kind of “social Europe”. We are opposed to it, but the answer is not a series of little national capitalisms, but the unity of the workers of Europe in the struggle for a United States of Socialist Europe.

The political instability, caused by the austerity measures, is reflected in a series of unstable coalition governments and violent swings of public opinion. In Italy they only managed to put together a coalition of the Democratic Party with Berlusconi with the greatest difficulty, and the leaders of the coalition spend most of their time attacking each other in public. Berlusconi’s main concern is to keep out of gaol. The general interests of Italian capitalism must take a very poor second place to this overriding consideration.

The unedifying spectacle of squabbling and splits at the top, corruption scandals (as in Spain), not delivering on their promises (France), and politicians filling their pockets (Greece), while inflicting severe pain on the rest of society has caused a general backlash against all the existing parties and their leaders. This is an alarming development for the bourgeoisie, which is using up the political reserve weapons it possesses to defend its system. A massive social and political crisis is being prepared in Europe.

The bourgeoisie is staring into the abyss, and may well be forced to retreat. Apart from anything else, austerity has signally failed to reactivate the economy. On the contrary, it has made a bad situation infinitely worse. But what is the alternative? The bourgeoisie is caught between the devil and the deep blue sea. It is not clear whether the eurozone will break up completely—a prospect that terrifies the bourgeoisie and not just in Europe. In order to prevent a complete breakdown, the EU bosses will be forced to abandon some of their more stringent conditions. In the end very little will be left of the original idea of European unification, which is impossible on a capitalist basis.

The problem of the European bourgeoisie is simply stated. The ruling class cannot afford to maintain the concessions that were won by the working class over the last half century, but the working class cannot accept any further cuts in living standards. Everywhere we see sharp falls in living standards; wage cuts; emigration is back as a phenomenon in countries of southern Europe towards countries like Germany. But when Germany is also hit by recession, where will they emigrate to?

The working class has been enormously strengthened since the Second World War. The social reserves of reaction have been sharply reduced. The peasantry, which was a very large proportion of society in the past, not only in Spain, Italy, France and Greece, but also in Germany, has been reduced to a small minority. Sections like the teachers, civil servants and bank employees, who in the past regarded themselves as middle class and would not dream of joining a union or going on strike, are now among the most militant parts of the labour movement. The same is true of the students, who before 1945 were mainly right-wing or even fascists, and are now firmly on the Left and in many cases open to revolutionary ideas.

The European workers have not suffered a decisive defeat for decades. It will not be easy to force them to give up what they have conquered. That was shown in October 2013 by the Belgian firefighters who turned up outside the parliament with thirty lorries, blocked all access, and sprayed the police with water and foam, demanding an extra €75 million to increase staff to acceptable security levels. The government were forced to give in when the railway workers also offered to help firefighters in blocking rail stations. This change in the balance of forces poses a serious dilemma for the bourgeoisie in applying the necessary austerity measures. Nevertheless, the ruling class is compelled by the crisis to continue their attacks.

Germany

On the surface it would seem that Germany has escaped the worst of the crisis. But Germany’s turn will come. The Achilles heel of German capitalism is its unprecedented dependence on exports: in 2012 German exports reached a record 44% of GDP (€1.1 trillion). The reason for this apparent success was that the real wages of German workers have been held at the same level that they were in1992. According to the FT: “Germany now has the highest proportion of low-paid workers relative to national median income in western Europe”. One quarter of the workforce are on “low income” wages. The number of temporary workers has trebled in ten years.

German exports, the sole source of growth in the last period, were thus based on low wages and high levels of investment. The high levels of productivity squeezed from the German workers gave German industry a big advantage over its European rivals, as we see from the following figures:

The fact is that German capitalism gained at the expense of its weaker European rivals who could not compete with its industries. Their loss was Germany’s gain. The euro then worked for the benefit of Germany above all. German banks were quite happy to lend money to countries like Greece to enable them to buy German goods. But now this process has turned into its opposite. Although they cannot admit it publicly, the leaked minutes of the first IMF bailout of Greece prove what we have stated in the past, namely that the bailouts to Greece are above all needed to save German (and French) banks.

The right-wing demagogues now heap curses on Europe and the euro. But the more serious strategists of German capitalism are filled with foreboding. They understand that Germany cannot restore its economic equilibrium as long as the rest of the eurozone is immersed in crisis. Where will it export its goods?

Speaking during an important economic summit in the German city of Hamburg, the former leader of the German SPD, Helmut Schmidt warned that: “Public confidence in European governments and the European Union has been shattered and Europe is on the verge of revolution”. He further stressed that major political and economic changes are necessary in Europe. But what changes are needed? And who will ensure that they are carried out?

Britain

The former workshop of the world has lost its industrial base and is entirely dominated by parasitic finance Capital and services. The UK has more bankers earning over a million pounds a year than the rest of the EU. Britain was claiming a “recovery” but the underlying picture is one of decline.

The recent period has seen the biggest and most consistent fall in living standards in Britain since the 1860s—over 150 years ago. There have been warnings of a new explosion amongst the youth along the lines of the riots that engulfed towns and cities all over Britain a few years ago. It is estimated that two million children go to school hungry every morning in Britain. This revelation so shocked the public that the government hastily announced the introduction of free meals for all primary school children.

Social attitudes in Britain have seen a massive shift. The old attitudes of respect and deference towards the establishment have turned into hatred. The people who were regarded with reverence in the past, Members of Parliament, the Press, the Judiciary and the Police, are regarded with suspicion and contempt.

“The public seems to think there is something rotten in the establishment”, states John McDermott in the FT. “In 2010, a Policy Exchange poll found that 81% of Britons agreed with the statement: ‘Politicians don’t understand the real world at all’. The British Social Attitude Survey reported that only 18% trusted governments to put the nation’s needs above a party’s, down from 38% in 1986. Banks fare worse. In 1983, 90% thought they were ‘well run’, compared with 19% today, perhaps the most dramatic attitudinal shift in the report’s 30-year history.

“Britain’s views of its institutions wax and wane—ask Her Majesty. But the successive scandals hitting banking, parliament and the media have the feel of an almost operatic collapse of faith in those who exert power in the country… There is a profound ignorance among the powerful as to the depth of anti-elite sentiment, in Britain and beyond.” (FT, 28/9/13)

Labour leader Ed Miliband was finally compelled to echo, even in the mildest way, the growing anger against big business and the banks after mounting pressure from the ranks of the Labour movement. Despite its limited and feeble character, this provoked an outburst of rage from the bourgeois press. The Financial Times accused Miliband of “trafficking in populist gimmickry”. Here we already have an outline of the contradictory pressures that will be multiplied a thousand fold when Labour enters government under conditions of crisis.

A further illustration of the crisis and decline of British capitalism is the uncertainty over the referendum on Scottish independence. The rise of nationalism has been a direct consequence of the betrayal of reformism over the last four decades. Today, with the Labour Party supporting capitalism and offering only more mild, less painful cuts, nationalist rhetoric of an independent Scotland based on social democratic reforms appears to offer some hope of change. The crisis in Britain shows how in the absence of a strong revolutionary alternative, nationalism can rear its head and gain support from even elements of the working class in countries where the national question was thought to have been settled long ago. Currently the outcome of the independence referendum is on a knife edge, as many disaffected workers and youth seek to leave a union associated with austerity, poverty for the masses and the Tory party. The capitulation of the left outside of the Labour Party has also contributed to the rise of nationalism by their support and tail-ending of the nationalists, arguing against neo-liberalism as the problem, and independence as the answer, rather than capitalism and socialist revolution.

France

The EU was originally intended to be a condominium in which France would be the political leader of Europe and Germany the economic engine. But now these plans of the French ruling class have been exposed as utopian dreams. Berlin decides everything, Paris decides nothing.

At the last elections the Socialist Party won a sweeping victory at every level. But very quickly the support for Hollande has evaporated. Like every other reformist leader he has accepted the role of managing the crisis of capitalism. As a result he now has the worst ratings of any President since 1958. The latest polls register an increase in support for the rightist Marine Le Pen, with Hollande trailing behind.

The media will try to present this as a swing to the right. Actually it expresses a general mood of frustration and discontent with the existing parties and disillusionment with the “Left”, which promised much and has delivered little. It remains to be seen whether the Communist Party with its reformist policies can win support from the Socialists or the Front de Gauche or can recover its earlier electoral successes.

Partly in order to divert attention from his domestic troubles, Hollande has launched a series of foreign military adventures in Africa (Mali and the CAR). Blocked by Germany in Europe, he is trying to revive France’s old role in Africa and the Middle East. But in reality, French imperialism lacks the muscle to play an independent role on a world scale. These military adventures will inevitably end in tears, adding fresh fuel to the flames of discontent at home.

France remains a key country for the class struggle in Europe. The French workers have shown time and time again that they have never forgotten their revolutionary traditions. The masses are seeking a way out of the crisis. They put their trust in the Socialist leaders, but the latter are organically linked to the capitalist system and the existing order. The “Left” dashes the hopes of the masses. Already in the municipal elections, the leaders of the CP and the Parti de Gauche have broken the Left Front. The CP is in alliance with the SP, a party of government, while the Parti de Gauche in some municipalities is in alliance with the Greens, who also have two ministers in the present government. By breaking the Left Front – at least at municipal level – they are disappointing those workers and youth who are seeking an alternative to the left of the SP. It is an indication of the complete reformist blindness of the CP leaders that they are clinging to the SP precisely at a time when Hollande and his government are discredited and deeply unpopular. Instead of maintaining a clear opposition to the government, they are desperately trying to preserve their positions in local government. Marxists should demand the leaders of the Left Front break with the Socialists and the Greens and strengthen the Left Front on the basis of genuine left and socialist policies.

What we see is a clear process of polarisation between the classes that will be expressed in a social explosion at a certain stage. Frustrated on the electoral plane, the workers and youth can take to the streets as they have done so often in the past. A repetition of May 1968 is being prepared. But this time it will be on a higher plane, and the Stalinists no longer possess the strength or authority to betray it.

Italy

Italy is teetering on the brink of a downward spiral of downgrades and rising bond yields. The consequences would be disastrous, not just for Italy but for the eurozone. Its accumulated debts amount to around €2 trillion. The government's borrowing costs threaten to strangle the Italian economy in the long run.

Unemployment is rising. In the last three years, one million people between the age of 25 and 34 have lost their jobs. Of those, under age 35 only four out of ten are working. Officially, there are over three million unemployed in total, but many people have given up on looking for a job because they have no confidence that they are going to find one. In 2012, more than 9 million people were classed as poor, of which 4.4 million are living in absolute poverty conditions.

A recent survey carried out by Legacoop (the main supermarket chain) confirms in writing what has been obvious for some time: three million households—12.3 percent of the population—cannot afford a high-protein meal every two days; 9 million Italians would not be able to meet an unexpected expenditure of €800; Italians are increasingly giving up the use of a car (25 per cent of the population); they no longer go on holiday (4 million fewer people this summer); and they don’t buy new clothes (23 per cent of the population). Spending on food in the past six years has fallen by 14 %, falling to the levels of 1971 (€2,400 per capita).

The Financial Times describes the tasks facing Italy as “economically painful and politically suicidal”. (7/10/13) Italian capitalism cannot compete with Germany and France and is falling behind. In the past it would have devalued its currency, but with the euro, that avenue is blocked. Instead it must resort to an “internal devaluation” (that is, deep cuts in living standards). But for this, a strong government is needed. That, however, is not possible.

Every one of the parties in Italy is divided. In the PD there is a split between the old CP apparatus and the openly bourgeois elements from the Christian Democracy. Monti's small party is riven with factions and is expected to fall from 10% down to 4% in the next elections. Even Grillo's Five Stars Movement is divided, with some clearly leaning in favour of collaboration with the PD.

The union leaders have played a pernicious role in supporting the so-called national unity government, swallowing all the anti-working class austerity measures. This particularly applies to the “left” leaders of the metalworkers’ union, the FIOM who, having aroused the hopes of the workers, then dashed them by joining CGIL leader Camusso in signing a common document for the CGIL congress. Here we see the precise role of left reformism in action. The right-wing trade union leaders cling to the bourgeoisie and the left union leaders cling to the right wing. None of them have any faith in the working class, which is left leaderless at the critical moment.

The betrayal of the leaders can lead to temporary demoralization and apathy. But that will not be the end of the matter. The Italian workers—like the Spanish, Greek and French—have a long tradition of spontaneous, insurrectionary movements. Blocked by their traditional mass organizations, they will find a way of expressing their anger in an explosive fashion. That was the meaning of the Hot Autumn of 1969. The five days of open-ended strike against privatisation of the Genoa transport workers in November 2013 show the real mood developing in the Italian working class. Such developments are implicit in the situation in Italy. And this is still truer in the case of the youth.

Spain

Five years after the start of the recession, Spain's economy will fall a further 1.4% in 2013. Unemployment is at a record high of nearly 27% of the workforce, with youth unemployment at a painful 57%. Over 6 million jobs have been destroyed since 2007, and hundreds of thousands of young people been forced to emigrate.

After several years of massive packages of austerity cuts, the budget deficit in 2013 is still expected to be a huge 6.5% of GDP, while debt will approach 100% of GDP. Austerity cuts have been combined with sweeping counter-reforms in the labour market which have allowed Spain to regain competitiveness in relation to her European neighbours. In other words, workers have been made to pay the full price of the capitalist crisis. And after all this pain and suffering all that has been achieved is vague talk of a mild recovery next year with growth rates being forecast of a mere 0.2% in 2014 and perhaps a full 1% in 2015. On this basis, it would take until 2021 to even recover the pre-recession level, nearly 15 lost years!

The truth is that the enormous amount of corporate, household and now state debt which was accumulated during the long years of the boom have not yet been absorbed fully by the system. Until that takes place, there can be no real sustainable recovery for Spanish capitalism. The current “optimistic” forecasts are based on a recovery of exports, which is wholly dependent on Europe coming out of recession—a very fragile basis for optimism.

The impact of the economic crisis on the consciousness of the masses has been profound and will be long-lasting. To the economic recession we must add the accompanying corruption scandals affecting all institutions of bourgeois democracy (the judiciary, the Monarchy, Congress, the ruling party). What we see in Spain is a crisis of the regime which is unravelling the whole edifice on which the ruling class had built its legitimacy since the end of the Franco dictatorship. All the old ghosts of the past are coming back to haunt the weak and retrograde Spanish bourgeoisie. The national question in Catalonia, fuelled by the economic crisis, has revived. The struggle for justice for the victims of the Franco regime has come back to the fore uncovering the reactionary character of the state apparatus and the ruling class under a thin veneer of democracy.

There has been a wave after another of mass mobilisations, particularly since 2011. The movement of the indignados, the anti-evictions movement, the education strikes, the battle of the miners, the spontaneous movement of the civil servants, two 24h general strikes, etc. Of course, the masses cannot be in a state of permanent mobilisation and there will be ups and downs, and periods of hiatus. However, the anger which has accumulated under the surface and that finds no channel of expression, is still there and can give rise to explosions at any time.

Portugal

Portugal remains mired in recession, with forecasts for a 2013 GDP contraction of between 1.6% nd 2.7% and (perhaps) very mild growth in 2014. Unemployment is at a record high of 16%, and the government will miss the deficit reduction targets for this year (5.5% of GDP is the target, the real figure will be more like 6%), despite years of massive austerity cuts imposed by the 2010 €78bn EU bailout.

The 2014 budget includes further cuts in public sector wages of between 2% and 12% per worker, and €728 million in pension cuts. Yet a further €3.3bn cuts are needed in 2014, together with yet another bailout. This has led to a collapse of support for the right-wing government. In the 2013 local elections the parties of the ruling coalition were heavily defeated. “The political environment is deteriorating”, moans the Financial Times.

The Portuguese government, which has slavishly carried out all the austerity measures dictated by the EU, begs for patience: “Please give us a little more time”. But the Money-men in Washington, Brussels and Frankfurt and the troika are not in a mood for patience. As the price for a new bail-out they will demand cast-iron guarantees that the austerity programme will continue to be implemented. The stage is set for even bigger mass protests.

Passos de Coelho, who boasted of being a strong man and a model pupil of the troika when he was elected in June 2011, is now exposed as the weak leader of a divided coalition. His government, which has earned the hatred of the people of Portugal, came very close to collapse after the general strike on June 27, 2013. This was the latest in a series of sustained mass mobilisations against the right-wing coalition.

The Portuguese working class is rediscovering the traditions of the 1974-5 Revolution. One million people came to the streets in September 2012, then one and a half million in March 2013. The problem is one of leadership. The “opposition” Socialist Party is still discredited (it signed the bailout conditions just before being booted out of office) and only gains in percentage terms because of the increased rate of abstention.

The Communist Party is the main beneficiary of this unprecedented wave of discontent. However, the two parties to the left of the SP are afflicted by a lack of a serious alternative to the crisis, the Bloco de Esquerda espousing a reformist-Keynesian “social Europe” and an “audit to the debt”, while the PCP advocates a semi-Stalinist “patriotic and democratic” economy outside of the euro.

Greece

After five years of grim austerity the problems of Greece, far from being solved, are worse than ever. The slash-and-burn policies of the troika have plunged the country into a deep slump. 1.4 million people are unemployed, including two out of every three youngsters. Levels of poverty that have not been seen since the war years have become the norm.

The government of Athens complains (with reason) that the cuts demanded by Brussels are pushing the economy further into recession, pushing tax revenues down, increasing the deficit and forcing them to borrow yet more. But these appeals fall on deaf ears. The Germans and other lenders reply that the southern Europeans have lived beyond their means for years and must “learn discipline”.

Each successive rescue package has served merely to gain a little time. But the markets are not deceived. The final denouement of the Greek crisis has only been postponed, but sooner or later it will become inevitable.

At the same time, Greece is a land of opportunity for financial speculators. The Financial Times published an article entitled “Hedge funds profit in land of Greek opportunity” where we read:

“Greece’s banking sector has been the area of greatest interest. Paulson & Co, Baupost, Dromeus, York Capital, Eaglevale and OchZiff are among those to have taken stakes in Alpha Bank and Piraeus Bank. All have profited handsomely. Frenzied trading in the warrants also means that hedge funds could end up dominating Greek bank share registers”. (11/10/13, our emphasis)

This plundering of Greece, the vicious impositions of the troika, and the collapse of living standards have provoked a massive wave of general strikes, demonstrations and mass protests. Two governments have already fallen, and a third is about to fall. Samaras is struggling to hold together a fragile coalition that cannot last long. The main beneficiary will be Syriza. But on the right the Golden Dawn has also grown.

Impressionistic elements have drawn the conclusion from the rise of Golden Dawn that there is an imminent danger of fascism. But what has happened to Golden Dawn confirms our position on prospects for fascism in present epoch. The Greek bourgeoisie is a vicious and reactionary ruling class, and a section of it would probably be prepared to hand power to the Golden Dawn—if they could. In fact, the most reactionary sections of the ruling class (the shipbuilders) have openly backed and financed it.

Unlike other right-wing political formations in Europe (Fini in Italy, Marine le Pen in France), who are striving to disassociate themselves from their fascist past and present a “respectable” parliamentary image, Golden Dawn is an openly fascist organization whose close links with the police and army officers have been exposed. These mad dogs had their own agenda, which seems to have included the seizure of power.

The problem is that the Greek working class is powerful, militant and undefeated. The bourgeoisie fears that by taking premature action, the fascists can provoke a mass movement that will be impossible to control. The Golden Dawn thugs went too far when they murdered a well-known left-wing singer, provoking massive protests. The Greek bourgeoisie was compelled to take some measures against them.

Of course, the bourgeoisie has no intention of wiping out the fascists. They have taken some measures for cosmetic purposes to calm the anger of the masses. Later on, the fascists will regroup under another banner, probably as part of a right-wing coalition with a more respectable (less Nazi) image. Meanwhile, the most rabid lumpenproletarian elements will remain as an auxiliary to the repressive apparatus of the state (to which they are organically linked), acting as strike-breakers and thugs, beating up immigrants and attacking left-wing people.

The immediate perspective for Greece is neither fascism nor Bonapartism but a further swing to the left. The inevitable collapse of the Samaras government will pose the question of a Syriza government. But to the degree that Tsipras gets closer to power, he moderates his language in the hope that he will get more votes. On the contrary, this provokes a mood of scepticism on the part of the Greek people who have grown accustomed to leaders who promise much and deliver little when they are elected.

The real mood of the masses was shown in an opinion poll that revealed that the workers of Greece are already drawing revolutionary conclusions. It stated that 63% of Greek people want a “profound change” in society—which means a revolution—while 23% say directly that they stand for revolution. The problem is not any lack of revolutionary maturity on the part of the masses, but the fact that not one of the existing parties or leaders is prepared to give a conscious expression to the burning desire of the masses to change society.

For the last four or five years the Greek workers have amply demonstrated their will to change society. They have staged one general strike after another. But the seriousness of the crisis is such that even the stormiest strikes and demonstrations cannot solve the problem. The call for more one-day strikes will meet with increased scepticism in the factories. Blocked on the road of strikes and demonstrations, the workers will move onto the electoral plane. Sooner or later they will elect a Left government, which will confront Syriza with a straight choice: either carry out a socialist policy or accept the role of managing corrupt and degenerate Greek capitalism. This will mark a new stage in the Greek revolution, opening up important possibilities for the Greek Marxists.

The BRICS

After the Second World War, growth in world trade was one of the main factors contributing to the boom. In recent decades a major expansion of world trade was based on numerous factors that are now exhausted, development of transport, information technology, communications, artificial expansion of credit, debt, complete incorporation of countries where capital was restored, the removal of protectionist measures in many countries, etc. The UN agency UNCTAD now predicts that world trade is likely to remain sluggish for many years, and this will have profound effects on so called emerging economies that have depended on exports.

The exaggerated hopes that Asia could act as the motor force of the world economy have been dashed. China’s growth is slowing and India is falling still faster. The European economy remains stalled and Japan’s prospects are already fading. The Japanese government has attempted to revive a stagnant economy by pumping in money. But this policy is completely unsound. Japan’s government debt amounts to 250% of GDP. The BRICS are all in the same position and even IMF predictions for the South East Asian economy have had to be scaled sharply downwards. The IMF now talks of “a structural slow-down occurring in emerging economies.”

Growth in the BRICS and similar economies has slowed. This is not difficult to understand. If Europe and the USA are not consuming, China cannot produce. If China cannot produce, then countries like Brazil, Argentina and Australia will not be able to export their commodities.

The announcement by the FED that it would initiate a process of reducing the supply of money by restricting "Quantitative easing", has led to a speculative wave of currency devaluation and a rising of the cost of money. The Indian rupee, the Indonesian rupiah, the Argentinean peso, the Brazilian real and the South African rand have all registered sharp falls. Nigeria’s finance minister warned that "the end of US quantitative easing will rattle emerging markets and lift their borrowing costs." The same point was made by Najib Razak, the Malaysian prime minister, who predicted that money will flow back to the USA.

Strong economic growth and rising living standards blunted the class struggle for much of the past decade, but in both Brazil and Turkey growth has plummeted. In fact, across the developing world growth has slowed markedly to levels that make it difficult or impossible to permit the entry into the labour markets of the new generation of youth.

China

The crisis of the BRICS is organically related to the slowdown in China. The emergence of China, which was seen by some—even some who called themselves “Marxists—as a guarantee of the future of world capitalism, has only served to sharpen all the contradictions. For a period, the explosive growth of the Chinese economy provided oxygen to world capitalism. Now this colossal advantage turns out to be a colossal problem. The massive investment in Chinese industry was bound to express itself as a mass of cheap commodities, which had to find a market outside China. For global manufacturers, the avalanche of cheap Chinese exports over the past decade has exacerbated the crisis of overproduction.

The combination of a capitalist restoration and the consequent opening of the economy to a huge influx of multinational capital, combined with a vast supply of cheap labour from the countryside and has enabled the emergence of modern machinery and technique fuelled by state subsidies and has enabled China swiftly to develop a powerful industrial base integrated in the world market dominated by imperialism. It has destroyed jobs and capacity all over the world, shuttering factories in competitor nations. Foreign companies learned to tremble at the flow of cheap goods from China. Initially, there was a very high rate of profit, but as Marx explains, all that happens is that other capitalists pile into the market and the rate of profit reaches more normal levels. We see this happening in China. The period of explosive growth has reached its limits. Now China finds itself faced with the same problems that afflict every capitalist economy.

China's low-cost goods have come to dominate many sectors. But once the bulk of global manufacturing in a given industry has moved to China, overcapacity quickly follows. Now they are increasingly worried about rising overproduction (“overcapacity”) in the Chinese economy. This poses a significant risk to what is now the world’s second-biggest economy.

During the global economic crisis, China helped save the capitalist system by launching a colossal stimulus package that provided a supply of oxygen to the world market. As a result, China's economy steamed along, growing 8.7 per cent and 10.3 per cent in 2009 and 2010. This was the biggest experiment in Keynesian economics in history. But now the contradictions have become apparent. Now many of the industries that were beneficiaries of the stimulus—from steel to shipbuilding to metals smelting—are paralysed by huge overcapacity, or, to give it its correct name, overproduction. The slowdown in China's economic growth spells enormous losses and the necessity for a painful process of elimination.

The Financial Times (17/6/2013) comments: “From chemicals and cement to earthmovers and flat screen televisions, Chinese industry is awash with excess capacity that is driving down profits inside and outside the country and threatens to further destabilise China’s already shaky growth”.

China produces nearly half of the world’s aluminium and steel and about 60 per cent of the world’s cement, but new productive capacity is being added rapidly, even as the economy slows down and export markets dwindle. Though China's steel production is running at record levels, only about 80 per cent of the country's production capacity is being used. Industry chiefs and government officials say more excess capacity needs to be shut down in order for the sector to come back into balance.

Again:

“Only about two-thirds of cement capacity was used last year, according to a survey from the China Enterprise Confederation.

“Usha Haley writes: ‘There is enormous overcapacity and no gauging of supply and demand and we found that subsidies account for about 30 per cent of industrial output. Most of the companies we looked at would probably be bankrupt without subsidies.’

“In almost every industry companies' investment and growth plans have been predicated on the belief that the government would never allow growth to drop below 8 or 9 per cent. But that is no longer the case. China's growth fell to 7.5% and later increased to around 7.8 per cent. But even this was its slowest pace in 13 years.

“Overcapacity in the auto industry is rampant and in the case of Geely, which bought Volvo in 2010, more than half of its net profits came directly from subsidies in 2011. In fact, subsidy income for Geely that year was more than 15 times greater than the next biggest source of net profits—‘sales of scrap metal’—according to analysis from Fathom China.” (FT, 17/6/2013)

The scale of overcapacity and the slowdown in Chinese growth suggest many more firms will face bankruptcy. Over the years immediately following the 2008 crisis, the Chinese authorities, through the BCPC (Central Bank), have pushed the banking system to give cheap credit in order to sustain and increase spending over infrastructure and the real estate market. This resulted in an increase of the total debt of the country that has reached at the end of 2012 the record percentage of 180% of the GDP, adding an additional factor of serious imbalance to the economic growth.

Much of the debt was built by the regional authorities to support the programs of development of the infrastructures, resorting even to the "shadow credit market" (i.e. out of the control of the central authorities), and contributing in a significative manner to inflate a huge housing bubble. This will have profound effects on the psychology of every class in China.

Perspectives for class struggle

All the successes of China’s economy were based ultimately on the labour of the Chinese workers, toiling for low wages in conditions resembling those of Victorian England. Nowhere is inequality so resented as in China, which was supposed to be a “socialist” country. A new class of Chinese bourgeois has emerged, revelling in luxuries unknown to the vast majority of the population.

China is run by a tiny elite of super-rich oligarchs who have enriched themselves by plundering the state and brutally exploiting the labour of the Chinese workers. But the base of the Chinese capitalist class is very narrow. Out of a population of around 1.354 billion, there are only 1.2 million millionaires (in US dollars). That is: 0.1% of the population. The number of dollar millionaires is rapidly growing but shows also how weak the capitalists are in China. 1.2 million Millionaires are less than the absolute numbers of millionaires in Britain or Italy.

It is true that beneath them there is a layer of sub-exploiters and sub-sub-exploiters: factory managers, directors, foremen, engineers, bureaucrats and officials in the State and Party institutions. Together with their families, they form part of the establishment. But even after taking this into account, the overwhelming majority of the population is excluded from the economic wealth and the power that comes with it. The obscene wealth of the ruling elite and their children (the “Princelings”) is bitterly resented by the population. The all-pervasive corruption that flourishes at every level is an additional cause of indignation.

The highly publicized trials that often lead to the death sentence for officials who have gone too far with their corrupt practices are a way in which the ruling elite attempts to assuage the anger of ordinary Chinese, while at the same time trying to prevent the corruption that is an inevitable concomitant of a bureaucratic and totalitarian regime from consuming an excessive amount of the wealth created by the working class.

The new generation of young workers is not prepared to put up with the low wages and bad conditions that the older generation of former peasants recently arrived from dirt-poor villages were willing to accept. The growing mood of discontent in Chinese society is expressed by the rising number of strikes, demonstrations and suicides in the factories. In a totalitarian society, where discontent is forcibly suppressed and there are few legal safety valves, explosions can occur suddenly and without warning. It is no accident that for the first time in history the Chinese state spends more on internal security than on defence.

Russia

Unlike the majority of European states, the Russian state does not yet have a serious debt problem. Thanks to oil and gas exports and the growth of the economy in the last period, it has built up considerable financial reserves. But this has now reached its limits. In common with the other BRIC countries, the Russian economy is also in decline, with an estimated rate of growth of around 1%.

This is the background to a rising mood of discontent, not only among the working class but also in a wide layer of the petty bourgeoisie, reflected in the rise of the anti-Putin opposition. As a result of the expansion of credit, the majority of workers and young people now find themselves burdened with heavy debts. The same is true of companies and municipalities. The result is falling investment and economic stagnation. For the first time, sectors of the economy like the automotive industry are experiencing serious problems with sales.

The economy is being propped up by the state through Keynesian methods of direct state investment in infrastructure, or in projects like the 2014 Sochi Winter Olympic Games and the FIFA World Cup in 2018. This modern equivalent of the Egyptian Pharaohs' pyramid-building is possible only on the basis of the exploitation of low-paid workers and the high price of oil and gas. However, a long period of high oil prices has had inevitable results in new technologies for oil and gas production in the USA (“fracking”). Putin’s “imperial energy” project has turned into a farce. His hysterical reaction to the antics of Greenpeace in the Barents Sea was a clear sign, not of strength, but of panic.

The growth of the economy in the last period enabled Putin to follow a kind of semi-paternalistic policy. That is what gave his regime the appearance of stability. But this cannot continue for long. The majority of new workers are faced with low wages and bad working conditions. There has been a steep increase in the numbers of illegal or semi-legal migrants from Central Asia. Social and political stability is already showing signs of strain, and this determines Putin's policy—and also that of the opposition.

The main aim of the liberal opposition is to wrest petty-bourgeois elements from the arms of Putin. The main figure in the opposition is now Alexey Navalny. In the last election for Moscow's mayor in September 2013, he won 27.24%, as against 51% for Putin's candidate, Sobyanin. The Communist Party candidate and leader of the “left” wing of the Party, Ivan Melnikov, obtained only 10.69%.

A lawyer and small investor, Navalny was expelled from the Liberal Party Yabloko for nationalism. His programme includes a struggle against corruption, “cheap government”, low taxation, the introduction of a visa regime for the countries of the former Soviet Central Asia and the deportation of unemployed non-citizens.

The reintroduction of capitalism has led to an extreme polarisation of wealth. The latest Credit Suisse Wealth Report shows graphically how much of world wealth is still concentrated in US hands in terms of absolute numbers of dollar millionaires, and the amount of accumulated wealth that is concentrated in their hands.

But it also highlights the fact that Russia now has the highest level of wealth inequality in the world, apart from small Caribbean nations with resident billionaires. Worldwide, billionaires collectively account for 1%–2% of total household wealth; in Russia today, 110 billionaires own 35% of all wealth.

The increase in tension between the classes was partially and temporarily alleviated by economic growth. But now that has slowed sharply, reflecting the general crisis of world capitalism. The IMF slashed its GDP growth forecast for Russia in 2013 to +1.5%, compared to 5% to 8% growth before the financial crisis. The situation in Russia is pointing towards a social explosion, even in the short term.

Lenin said that the first condition for revolution is that the ruling stratum should be in crisis and unable to continue ruling in the old way. There is a general mood of pessimism in the establishment, at times bordering on panic. Putin's main idea is to build a strong police state before the crisis breaks.

Lenin’s second condition for revolution is a ferment in the middle layers of society, which swing between revolution and counterrevolution. The mass demonstrations against electoral fraud, which were predominantly middle class in character, indicate that this process has already begun.

The third condition, that the workers should be prepared to struggle and make sacrifices to change society, has not yet matured in Russia. But the advent of economic crisis and growing disillusionment with Putin means that it is only a matter of time before Russia experiences social explosions similar to what have taken place in Turkey and Brazil.

The problem is one of leadership. The complete inability of the so-called Communist Party to offer an alternative to the masses means that the protests have been led by bourgeois Liberals and petty bourgeois democrats. But this movement is only a symptom of a growing unrest, which sooner or later must be expressed in a social explosion. In time, the Russian working class will rediscover in action the real traditions of the October Revolution and Bolshevism.

India and Pakistan

The Indian bourgeoisie had delusions of grandeur. Prime Minister Monamhan Singh claimed that India’s “cruising speed” was 8-9%. Now it is about half that. Private investment has dried up. Inflation is more than 10% and rising. The rupee fell 13% in the space of three months in 2013. The Economist (24/8/13) warned: “Tycoons who used to cheer India’s rise as a superpower now warn of civil unrest”.

This prediction is already becoming reality. The ferment in Indian society is reflected in a series of mass movements on different issues. First there was the anti-corruption movement, which was followed by mass demonstrations against rape and attacks on women. Both were largely petty-bourgeois in character but revealed an undercurrent of discontent with the conservative Hindu-nationalist foundations of the Indian state.

These manifestations were like the froth on the waves of an ocean; that is to say, symptoms of far deeper and stronger currents below the surface. The discontent of the masses, who have not benefitted from the growth in the Indian economy, is turning into anger. That was shown by a series of peasant insurrections and above all by the two-day general strike in February 2013.

On the other side of an artificial frontier, Pakistan has been reduced to a level of misery worse than anything it has seen since Independence. Economic collapse, terrorist attacks, suicide bombings, power cuts, price hikes, suicides of impoverished families, the selling of children and human organs, the torture and murder of women. All this brings to mind Lenin’s statement: “Capitalism is horror without end”.

The masses’ hopes for improvement under a PPP government were cruelly betrayed. Now the right-wing government of the Muslim League is carrying out further attacks. They are plundering the state through the privatizing of state-owned enterprises like Pakistan International Airlines, the postal service, railways, WAPDA (Water and Power Development Authority), and other companies.

As a result, there will be more sackings, more unemployment, more poverty and more economic dislocation. The misery of the people is aggravated by the monstrous religious sectarianism, communal massacres, the bloody proxy wars in Baluchistan, the drone attacks in Pukhtoonhua, etc. The Pakistani secret service (ISI) continues to operate like a state within a state, stirring up conflicts, murder and violence to serve its dark intrigues. As a way of diverting attention from the terrible suffering of the masses, the degenerate Pakistan ruling class is playing with fire in conflicts in Afghanistan and with India. The conflict in Kashmir continues to poison relations between the two countries like an infectious ulcer.

On a capitalist basis there is no way out. Neither the Muslim League nor the PPP nor a military dictatorship can succeed. Only the Socialist Revolution can show a way out of the hell in which millions of people are living in Pakistan, India, Bangladesh, Nepal and Sri Lanka. The terrible conditions of life are becoming intolerable. The objective conditions are being prepared for a revolutionary upsurge on the lines of the Revolution of 1968-69. That Revolution was derailed by the lack of leadership. But the growing forces of the IMT in Pakistan, under the most difficult conditions imaginable, offer the hope of future victory. We must redouble our efforts to strengthen the forces of the Pakistan Marxists to ensure that victory.

Afghanistan

After thirteen years of bloody fighting, the imperialists are striving to extricate themselves from the Afghan morass. When the US-led coalition army went into Afghanistan, we predicted that their initial success would eventually end in failure. We wrote at the time:

“The swiftness of the collapse of the Taliban's defence, and the ease with which the Northern Alliance entered Kabul, has led many to conclude that the war is over and that the Taliban are finished. This is a serious misreading of the situation. […]

“The Taliban have lost their grip on power, but not their potential for making war. They are very used to fighting a guerrilla war in the mountains. They did it before and can do it again. In the north, they were fighting in alien and hostile territory. But in the villages and mountains of the Pushtoon area, they are in their own homeland. The prospect opens up of a protracted guerrilla campaign which can go on for years. The first part of the allied war campaign was the easy bit. The second part will not be so easy. British and American troops will have to go into the Pushtoon areas on search and destroy missions, where they will be sitting targets for the guerrillas. Casualties will be inevitable. At a certain stage this will have an effect on public opinion in Britain and America.

“The Americans had hoped to be able to carry out a quick, surgical strike against bin Laden, relying mainly on air power. Instead, the conflict is becoming ever more complicated and difficult, and the prospect of an end is postponed almost indefinitely. They will have to keep troops stationed not only in Afghanistan but in Pakistan and other countries in order to prop them up. […]

“This is a far worse and more dangerous position than the one in which the Americans found themselves on September 11. Washington will now be compelled to underwrite the bankrupt and unstable regime in Pakistan, as well as all the other ‘friendly’ states in the region, which are being destabilized by its actions. If the aim of this exercise was to combat terrorism, they will find they have achieved the opposite. Before these events, the imperialists could afford to maintain a relatively safe distance from the convulsions and wars of this part of the world, but now they are completely entangled in it. By their actions since September 11, the USA and Britain has got themselves dragged into a quagmire, from which it will be difficult to extricate themselves.”

This was written on November 15, 2001 (Afghanistan after the fall of Kabul: Is the war over?). Twelve years later there is no need to change a single word of what we wrote then.

With a per capita GDP of $528 in 2010/11, Afghanistan is among the 10 poorest countries in the world. In 2008, 36 percent of the population lived below the poverty line; more than half of the population is considered vulnerable. At 134 per 1,000 live births, infant mortality is highest in the world. Life expectancy is 48.1 years. 75 percent of the population is illiterate. It is also the world’s largest supplier of opium.

The vast amounts of money spent on a useless war would have been sufficient to transform the lives of the people. Instead, the imperialists have devastated the country and are now compelled to leave, having solved nothing. They are negotiating with the Taliban, who will inevitably have a big say in any future government in Kabul. Nothing has been achieved except to further destabilise the entire region, starting with Pakistan.

Latin America

Mass protests against the Morsi government, 30 June 2013The economies of a number of South American countries (including Brazil, Chile, Peru, Bolivia, Ecuador and Colombia) which benefited from exporting raw materials, commodities and energy sources to China, are now suffering the knock-on effects of the slowdown of the Chinese economy. This will have profound political and social implications in the next period, as we have already seen with the big movements against fare rises in Brazil.

After a period of rising class struggle throughout Latin America (most notably in Venezuela, Bolivia and Ecuador), with right wing governments being overthrown in mass uprisings, the election of presidents who took measures that pushed them into conflict with imperialism, regional uprisings, etc., the revolutionary wave in the continent seemed to have reached a certain hiatus. There is a kind of deadlock in the struggle between the classes, in which neither side has been able to win a decisive victory.

Attempted coups were defeated by the masses in Venezuela (on several occasions), Ecuador and Bolivia. The forces of reaction and imperialism were not able to inflict a decisive defeat on any of these movements, with the exception of the coups in Paraguay and Honduras, which nevertheless did not put an end to the revolutionary movement in those countries.

In Colombia, the beginning of peace negotiations between the government and the FARC, which shows the inability of the guerrillas to win the war, have opened the way for the development of the class struggle along classical lines. The new president Santos has seen his popularity collapse (from 46% down to 21% between June and August 2013) after a series of strikes of the coffee growers, judiciary workers, students, and more recently, a national agrarian strike which put his government against the ropes. The attempt of the Colombian ruling class to “normalise” its methods of rule (after having relied heavily on the paramilitaries under Uribe), backfired as a wave of class struggle was unleashed.

With the return of the PRI to power, the Mexican ruling class has managed to get a relatively strong government which has allowed it to carry out measures they had been planning for years. Even before Peña Nieto was sworn in, they had already approved the labour reform. This eliminated a series of conquests, won at the time of the Mexican revolution, which would make it easier to exploit the working class.

Another key step has been the energy counter-reform, which opens the door for multinational companies to invest in the electricity and oil sectors. The nationalisation of oil, by the Lazaro Cardenas government in 1938, meant that, for many decades, Mexico had relative economic and social stability. Now, that has come to an end. Before the energy reform, the oil company Pemex was contributing up to 40% of the state budget. Now, a large part of those resources will be channelled into the pockets of private capitalists. This will lead to a budget deficit, which will be balanced through increased taxation and cuts in social spending.

The decay of Mexican capitalism is expressed by growing unemployment, the development of the informal economy and by growing misery and social decomposition. This is most clearly expressed in the development of the drugs market and the resulting war on drugs, which has meant increased pain for the masses. These reforms mark a turning point, and they will lead to a worsening of the living conditions of the Mexican people, in the coming years.

The leadership of the unions and of Morena, with its reformist electoral outlook, has acted as a brake which has prevented a unified fight-back based on the methods of revolutionary mass action. However, there is a growing mood of anger. This is being expressed by the formation of Morena, in militant trade union struggles - like those of the teachers and electricity workers - by the entry into the movement of a new generation of radicalised youth, and by the development of the many community police and self-defence groups.

In the state of Guerrero there have been mass armed mobilisations, and in Michoacan there are municipalities, which are in a state of open civil war. Though this process is riddled with contradictions, these are symptoms of the enormous pressure that decomposing Mexican capitalism is exerting on the masses - which are beginning to draw revolutionary conclusions. The government of Peña Nieto will continue its policy of attacks and counter-reforms, which are preparing a widespread fight-back by the workers.

However, because of the lack of the subjective factor—a clear revolutionary leadership—the Latin American masses were prevented from taking power into their hands and abolishing capitalism. This has led to an impasse and a temporary and unstable equilibrium between the classes, a state of affairs that was prolonged by the economic boom. The world recession which started in 2007-08 only partially affected South America, and the region recovered quickly from it, on the back of resource-hungry China. But that is now coming to an end. That was revealed in a very dramatic way by events in Brazil.

Brazil

In the last period (until 2011), Brazil enjoyed high rates of growth, mainly because of exports to China. This enabled the capitalists to concede wage demands when confronted with labour shortages and strikes. Wages rose by an average of 3.5% between 2002 and 2013 in real, but in dollar terms, the increase was still higher (the real was overvalued). 95% of wage negotiations ended in increases higher than the rate of inflation.

But now everything has changed. The sharp slowdown of the economy in 2011 (+2.7%) and 2012 (+0.9%) suddenly revealed widespread frustration, culminating in the eruption of the mass movement in June 2013. The relatively low levels of investment by the capitalists meant that rising wages have not been matched by increased productivity. Since 2003, Brazil's unit labour costs have doubled, and in dollar terms they have even trebled.

The low levels of investment have led to a steep fall in productivity compared to the other big economies. The boom in exports to China masked for a period the catastrophic position of Brazil. An Economist special report on Brazil (September 28, 2013) indicates that Brazil is moving towards a period of increased crisis and class struggle. Inflation, which is approaching 6%, is driving down the living standards of ordinary people and fuelling the economic demands of the working class. This fact explains the desire of a section of the Brazilian bourgeois to get rid of the PT. They don't feel the PT will be able to wield the knife soon and deep enough. Another section is terrified at the prospect of dealing with the rising class struggle without the aid of the PT leaders.

The movement against fare rises, which rapidly spread to the whole country, reflected a wider discontent which had accumulated in society. It represented the arrival of the revolutionary wave of the Arab countries and Southern Europe to Brazil. Although the movement was leaderless and inevitably had many confused elements, it represented a significant turning point, and was followed by a series of national days of action by the trade union movement and a huge mobilisation around the teachers’ strike. Dilma Roussef will certainly not enjoy the long economic boom which guaranteed the stability of Lula in power. This will create exceptional conditions for the Brazilian Marxists in the next period.

Venezuela

In Venezuela, the narrow victory of Maduro in the April presidential elections, after the death of Chavez, represented a serious warning to the Bolivarian movement. However, the attempt of the oligarchy to use the close result to overthrow Maduro backfired. Once again the masses came out on the streets and defeated the right-wing provocations through revolutionary mobilisation.

The key factor is now that the economic dislocation caused by the attempt to regulate the capitalist economy, the deliberate sabotage of the ruling class, and the investment strike on the part of the capitalists is seriously eroding the social basis of support for the revolution. Scarcity of basic products is combined with rampant inflation, which has now reached 50%. This situation cannot be sustained for a very long period of time. Either the revolution takes decisive steps in the direction of abolishing capitalism, or the economic chaos will create the conditions for the bourgeoisie to come back to power and attempt to smash the revolution.

The policy of the Maduro government after the April election was one of attacking the opposition in the political arena, while at the same time attempting to reach a deal with the capitalists in the economic sphere. Concessions were offered to private businesses regarding access to hard currency, including liberalisation of price controls, and the idea of creating Special Economic Zones on the model of China was proposed. This was a utopian policy which could not resolve anything. Any concessions made to the ruling class will undermine the social base of the revolution while not solving any of the fundamental economic problems.

In the run up to the December 2013 municipal elections, the government took a different turn, striking blows against the capitalists. These were still within the logic of regulating capitalism, but proved very popular with the working masses and served to rekindle the revolutionary enthusiasm of the rank and file. It was these measures against speculation and overpricing which guaranteed the victory in the municipal elections. Even if the oligarchy manages to come back to power, that will not be the end of the revolution. It could have the salutary effect of radicalising the Bolivarian movement, as happened with the defeat in Spain in October 1934 (the “bienio negro”), which was only a prelude for an even more decisive battle between the classes. No leader of the Bolivarian movement commands the same authority that Chavez had, and therefore criticism of the leadership, the bureaucrats and the reformists by the masses acquires a much sharper and more open character.

The main task remains the building of a revolutionary leadership with roots in the working class vanguard, able to harness the extraordinary energy which the revolutionary masses have shown over 15 years, and direct it towards the taking of power and the abolition of capitalism.

World Relations

Lenin once wrote about “combustible material in world politics”, and there is no shortage of such material in the world today. The aggressive actions of the imperialist powers give rise to internal opposition and can act as a further radicalising factor. Revolutionary moods can arise not only from economic factors but also from wars, terrorist acts, natural disasters and events on a world scale. We saw that in the past over the Vietnam War, and the same thing can happen again.

The revelations of Wikileaks and Snowden have exposed the real opinions, motives and interests of US imperialism, tearing away the smiling mask of diplomacy to reveal the ugly face of cynical self-interest. They have also exposed the inability of the US to keep other regimes' secrets. They have shown the extent to which the US is spying on its allies. And they have revealed before the public opinion of the world the real nature of bourgeois diplomacy in general. In so doing they have provided an important service to the international working class.

The fall of the USSR just over twenty years ago led to a major shift in world relations. The USA was now the only global super power. With colossal power came colossal arrogance, as expressed most clearly in the so-called Bush Doctrine. US imperialism proclaimed its right to intervene in any country, to depose governments and dictate its will everywhere. But two decades later these delusions of grandeur are somewhat dented.

The rise of China as an economic and military power has fundamentally modified the balance of forces in Asia and the Pacific. The Chinese ruling elite has ambitions to assert its political and military role in line with its growing economic power. This increasingly brings it into conflict with other countries in this important region, in the first place Japan. The conflict over disputed islands is only one manifestation of this. Washington is observing this phenomenon with growing alarm. US imperialism has always regarded the Pacific as a pivotal element in its global strategy. The rise of China thus poses a direct threat to its interests, which can lead to serious conflicts in the future.

Russia is playing a more independent role in world relations than in the past. Having suffered humiliation in Yugoslavia and Iraq (both previously Russian spheres of influence), Russia is no longer prepared to accept the impositions of US imperialism on a world scale. This was shown by its actions in Georgia, which the USA was attempting to draw into its orbit. Russia used its armed power in 2008 to give Georgia a bloody nose and prevent it from joining NATO. In Syria, Moscow drew another line in the sand, which the Americans dared not cross.

However, that it is not because of Russia’s strength, but because of the relative weakness and paralysis of US imperialism. In the last ten years, the US imperialists have behaved like an elephant in a china shop. As a result they have almost no reliable allies anywhere. The invasion of Iraq has been a disaster. Bush’s intention was to show America’s power. But the Iraq adventure backfired badly, further destabilising what was already a highly volatile region. By destroying the Iraqi army, he caused chaos in Iraq and tilted power in the region towards Iran.

All this has caused a sea-change in public opinion in the USA. After the evident failures in Iraq and Afghanistan, the American public is tired of foreign military adventures, and a mood recalling the old American isolationism is beginning to resurface in Congress and in the population. As a result, Obama was unable to carry out his declared intention of bombing Syria. In a pathetic speech, in which he contradicted himself in every other sentence, Obama said that the USA could no longer do what it liked in the world.

The Middle East is now a seething caldron of instability. This has been exacerbated by the clumsy and short-sighted policy of US imperialism. The growth of Iranian power in the region has unnerved Saudi Arabia. Riyadh has had to resign itself to the idea that Tehran now has a commanding influence over large parts of Iraq. The chaos in Iraq has given rise to a bloody sectarian conflict between Sunnis and Shias with daily terrorist bombings and massacres. The Saudi royals fear that power may be slipping from their grasp. These fears were underlined by the mass uprising in Bahrain in 2011.

In the Middle East we see the limits of US power. The manifest weakness of US imperialism has caused the traditional allies of the US in the Middle East to follow their own interests to a far greater extent than in the past. In several instances this has led to a clash of interests and open defiance of the US. This was shown by the Saudi promise to make up for any cut in US aid to the Egyptian army. The Saudis were upset by the removal of Mubarak in Egypt, who was a reliable ally. Washington managed to offend the Egyptian armed forces by reducing military aid following the overthrow of Morsi.

The Qatari ruling clique poured $8bn of financial support into Egypt, and was the main Gulf backer of the Morsi government. They were betting that the vacuum left by ousted Arab autocracies would be filled by the Islamists, and they were hoping to harness them in order to boost Qatar’s position in the region.

Qatar has burnt its fingers in Libya, then Syria, and also lost billions of dollars in Egypt. That money was meant to buy political advantage, but they backed the wrong horse. The United Arab Emirates and the Saudis will step in to help keep the Egyptian economy afloat. All this resembles the wars between rival “families” of the Mafiosi, which is what all these pampered, oil-rich royal gangsters really are.

Syria

What began as a popular uprising against the Baathist regime in Syria has degenerated into a sectarian civil war. The Saudi and Qatari ruling cliques intervened in order to crush the revolutionary elements and divert the struggle along sectarian lines.

Washington wanted to base itself on the bourgeois “democratic” elements of the so-called Free Syrian Army (FSA) but has been completely outmanoeuvred by the Saudis and Qataris who have armed and supported the jihadi militias. However, the Saudis and Qataris are supporting different wings of the Syrian militias. The Saudis are leaning on the salafists and both Jihadist and non-jihadist elements to try and undermine the predominance on the ground of Jabhat al-Nusra (the official Al-Qaeda branch in Syria) and al-Qaeda ISIS (Islamic State in Iraq and Syria).

The Istanbul-based Western-backed National Coalition was formed in November 2012, and is recognised by more than 100 countries as a “legitimate” representative of the Syrian opposition. The USA and the EU would like to base themselves on the “moderate” bourgeois elements in the opposition. But they have come up against an insurmountable problem. The NC was publicly dismissed by eleven Islamist militias, including some that are formally part of the FSA, stating that they do not recognise it.

It is well-known that the jihadi militias do most of the fighting, and they are not willing to subordinate themselves to the NC. The result has been fighting between different opposition groups and a further fragmentation of the opposition. Taking advantage of the weakening of the central power, the Kurds are now virtually independent in the Northeast, which means there are now two more or less independent Kurdish states in the region. This adds to the instability and will encourage Kurdish separatist sentiment in both Turkey and Iran.

The reactionary Islamist elements now have complete control of the armed rebellion. Now there is open fighting between the jihadists and the FSA, and between the jihadists and the Kurds. . Even more significantly, there is open fighting among the various jihadist groups themselves, where all factions are aligned against the quite powerful ISIS, while in a complex scene competing among each other depending on the countries backing them: Saudi Arabia, Qatar, Turkey etc. There are also a number of militias fighting on the side of the government that are outside Assad’s control. Syria is now heading in the same catastrophic direction as Iraq or Afghanistan, with local warlords seizing power locally. The country is disintegrating before our eyes. What we now have in Syria is counterrevolution on both sides.

The two sides had fought each other to a bloody stalemate but the intervention of Hezbollah and the Iranians changed the balance of forces in the government’s favour in the summer of 2013. The Americans were looking for an excuse to intervene in Syria to rectify the situation, but the weakness of US imperialism was shown by the fact that Obama could not even get a vote to bomb Syria through Congress. As a result, he was completely outmanoeuvred by the Russians, who seized the diplomatic initiative when John Kerry made what was probably an off-the-cuff remark to the effect that Syria could avoid being attacked if it gave up its chemical weapons.

The issue of chemical weapons shows the nauseating hypocrisy of the imperialists. Let us leave aside the fact that the USA itself holds the biggest stocks of chemical weapons in the world and that they used chemical weapons like Agent Orange extensively against the people of Vietnam, as well as things like napalm. More recently they used white phosphorous bombs in the bombing of Fallujah, provoking horrific consequences for the population. They had no objection to the use of chemical weapons by Saddam Hussein when they were used against Iranian soldiers in the war between Iran and Iraq.

It is patently obvious that the question of chemical weapons was used as an excuse to attack Syria because the government forces, aided by Iran and Hezbollah, were inflicting heavy defeats on the rebels. The intention of Washington was to deal a blow against Syria’s armed forces that would aid the rebels. That was not intended to allow the latter to win a military victory, but only to restore a certain equilibrium between the two sides in order to allow room for diplomatic manoeuvring. The interests of the unfortunate people of Syria and humanitarian considerations were very far from their minds.

This manoeuvre was cut across by the offer of the Syrian regime (prompted by Moscow) to hand over its entire chemical arsenal. This act had no practical effect on the military capacity of the Syrian regime, which has used conventional weapons very effectively to slaughter its enemies for the entire war. Having effectively outwitted the Americans on the issue of chemical weapons, Assad has launched a major offensive against the rebels, inflicting heavy defeats on them. However, it seems doubtful whether either side has enough strength to win a decisive military victory.

The Russians and Americans are manoeuvring with the other regional powers to organize some kind of “peace conference” in Geneva. But even if this is held, the results will not serve the interests of the people of Syria. On the one side, the Saudis and Qataris are backing the forces of black jihadi reaction. The Americans’ only interest is to maintain their control of the region and resist the rise of Iranian influence. The Russians are likewise only concerned with maintaining their hold on Syria, a traditional ally. Until now they have backed Assad, but they would be quite prepared to sacrifice him, on condition that their basic interests in Syria were protected. After the debacle in Iraq, both the Russians and Americans (and their “democratic” European allies) agree that the Syrian state must be maintained in the interest of upholding “law and order”.

The military stalemate provides an opportunity for the outside powers to intensify their search for a “negotiated settlement”. The partial thaw in relations between Washington and Tehran may open the way to Iran’s participation in the Geneva peace conference. This prospect has been greeted by jubilation in Damascus and Tehran, and by fury in Israel and Saudi Arabia.

What the ordinary people in Syria think about all this is not known. They will not be present in Geneva, and their opinions are not a matter of any interest to any of the powers involved. The future of Syria now depends on events beyond its frontiers: i.e., on revolutionary developments in Turkey, Iran and above all, in Egypt. Such developments would dramatically alter the class balance of forces in Syria.The situation in Syria has spilled into the neighbouring Iraq and Lebanon. In Lebanon, the state has been struggling to control the northern city of Tripoli and its surroundings where there have been frequent clashes between Militants of the Sunni majority and the Alawite minority of this region. Groups affiliated with Al-Nusra Front and the Salafist movement have carried suicide bombings in the stronghold of Hezbollah in the southern Suburb of Beirut. They have also attacked Lebanese army checkpoints and fired rockets on Shia villages in the Beqaa valley.

The situation in Iraq is no better. ISIS controls swaths of eastern Iraq especially in the province of Anbar where they have a very strong presence in the cities of Fallujah and Ramadi. The insurgency in Iraq has been fuelled by the war in Syria and the corrupt and sectarian Maliki government is unable to do anything about it. The rate of bombing attacks on popular Sunni and Shia areas have increased radically claiming the lives of thousands of innocent civilians.

The rather artificial and arbitrary borders separating these countries have largely disintegrated. None of the three states can assert control over their borders. Sunni and Shia fighters from both Lebanon and Iraq have joined the two sides of the Syria war as fraternizing on tribal and sectarian grounds has been going on nonstop. Young men are being smuggled freely in and out to fight alongside their brethren, and so are large amounts of arms and military supplies.

The Jordanian state has been able to avoid this disintegration so far. However, the puppet Jordanian king finds himself stuck between a rock and a hard place. On the one hand, he must follow the dictates of Washington and Riad, allowing rebels to train on Jordanian land and resupply through the border. On the other hand, the civil war in Syria has given a pulse of life to Islamists opposing the King, with many Jordanian Jihadists crossing the border back and forth to fight in Syria, and the Jordanian Muslim Brotherhood gaining in strength. The west is playing a very dangerous game here.

The Egyptian Revolution

The magnificent Arab Revolution, which has not yet finished, unleashed the colossal power of millions—what the bourgeois press calls “the Arab street”. This was a turning point in world history. Events in the Middle East will have profound effects both economic and political. Egypt is the key country in the Arab world. What happens there always has a knock-on effect on the entire Arab world and throughout the entire region. The Revolution entered a new stage with the mass upsurge that overthrew Morsi and the Muslim Brotherhood.

The mass revolutionary movement that overthrew Morsi brought 17 million people onto the streets of Egypt. A movement of such dimensions has no parallel in history. In reality, power was in the hands of the masses in June 2013, but they did not realise this, and there was nobody to explain it to them. The central problem is easily stated: the masses were strong enough to overthrow the government, but they were not sufficiently organized and conscious to take the power that they effectively held in their hands. As a result, the opportunity was missed and the army chiefs were able to step in to fill the vacuum.

The actions of the army were roughly analogous to the actions of Napoleon on 5 October, 1795, when he dispersed a Royalist mob on the streets of Paris with a “whiff of grapeshot”. Then, as now, the reactionaries stirred up a movement on the streets which, had it succeeded, would have signified the victory of the counterrevolution. In Egypt, the masses demonstrated their enthusiastic support for the repression of the Brotherhood, which they correctly saw as the forces of black reaction. But this historical analogy has its limits. Napoleon could succeed in imposing his counterrevolutionary dictatorship only because the revolutionary masses had exhausted themselves. In Egypt, on the contrary, the Revolution has considerable reserves, which assert themselves at every decisive stage.

The strength of the Revolution was shown by the weakness of the Brotherhood and its inability to organize an effective response to the defeat of Morsi. Only in Cairo and Alexandria were they able to call big demonstrations, and even there, only in the more affluent and middle-class suburbs. Everywhere else they were met with the fierce opposition of the revolutionary masses, who kicked them out of one neighbourhood after another. Finally, they were easily dispersed and crushed by the army.

In the absence of a genuine revolutionary Marxist party, the army chiefs were able to manoeuvre, Bonapartist-style, leaning on the masses to strike blows against the Muslim Brotherhood, the next day arresting workers’ leaders and aborting strikes.

The revolution is a vast school for the masses who can only learn from experience. The second revolution was on a far higher level than the first. Gone was all the softness and naivety represented in the slogans of “we are all Egyptians”, and instead, there was a hard and uncompromising revolutionary will which meant that the whole process took only a fraction of the time necessary for the 18 days of revolution in 2011. But the handing over of power to the SCAF meant handing back power to the same old ruling class, albeit a different part of it than the one Morsi represented. This means that the masses will have to go through another hard earned lesson.

It is true that Al-Sisi is a counter-revolutionary, who has temporarily consolidated his power with classically Bonapartist methods. But he is much more clever than Morsi. The counterrevolutionary nature of Morsi was clear, but Al-Sisi's role is not yet clear in the eyes of the masses, who see him as their ally. They see the crackdowns of the army against the Brotherhood as a revolutionary act. That is why they were prepared to give Al-Sisi time, but the patience of the masses will not last indefinitely. Already, the Biblawi government, which was appointed by Al-Sisi, is very unpopular.

After the elections for parliament and for the presidency, criticism of the government will grow and the contradictions between the revolution and the new rulers will become ever clearer. The bottom line is the economic crisis, which has caused mass unemployment and poverty. The question of prices and jobs continue to be unresolved. If Al-Sisi stands in the next election, he may be elected with a big majority. But once in power, he will be expected to deliver the things the workers, peasants and unemployed want: jobs, bread and houses. But on a capitalist basis, this is not possible. The stage will be set for a new and stormy period of revolutionary upheavals.

New, fresh layers are coming into the struggle all the time. The older, tired layers—including some who played a leading role in the earlier stages—will tend to drop away, disappointed and disoriented by events which they did not foresee and which they do not understand. They constantly complain about the alleged “low level” of the masses. But it is they who commit the grievous crime of confusing revolution with counterrevolution.

Those misguided “Leftists”, who echo the propaganda of the bourgeois and the imperialists, and who dismiss the magnificent mass movement that toppled Morsi as a “coup”, have understood nothing. The movement last June was in effect the Second Egyptian Revolution. The masses who overthrew the hated regime of the reactionary Muslim Brothers got a sense of their own collective power, which they have not lost, and which will provide the basis for a new revolutionary offensive in the coming period. We must turn our backs on the old, demoralised elements and face to the youth, the new generation of fighters who represent the revolutionary future.

In addition, close attention must be paid to the movement of the Egyptian working class in both its economic and political aspects. The workers' movement prepared the ground for the Egyptian revolution and played a decisive role in its victories. However, the rhythms of the movement of the masses in the squares and that of the workers on the industrial front are not identical. For example, while demoralization has been widespread among many activists since Sisi is using the pretext of combating the Muslim brotherhood to crack down on the revolutionary activity of youths and students, there has been a rise in the number of labour activity and strikes, and many are victorious. The mood among workers is definitely not one of defeat but rather militant and combative.

Iran

The election of Rouhani marked the beginnings of a change in the situation. The elections were a clear sign that the regime could not continue its previous course. The 2009 mass movement was suppressed violently and kept down by a constant increase in internal pressure and removal of democratic rights. The crisis of the regime was reflected in the open conflict between Ahmadinejad and Khamenei. The economy was in a deep crisis, greatly magnified by the imposition of sanctions by the US and the EU. Unemployment, which was already high, reached new levels. The collapse of the rial meant that inflation rates soared above 100 per cent. Industry, production and trade were grinding to a halt.

Millions of workers had to cope with the explosion of prices, while they had either been sacked or had not received wages for months. For the middle classes it was no less disastrous. Families who had been used to relatively stable lives found themselves bankrupted overnight, their savings devalued and their businesses ruined.

The presidential elections were supposed to have been planned and non-controversial. But during the campaign the different candidates, who had been vetted thoroughly, attacked each other violently. The open split in the ruling class enabled the masses to force themselves onto the scene.

Hassan Rouhani's campaign meetings served as a focal point for mobilization. The entrance of the masses upset all of the plans of the ruling clique. The Mullahs were forced to change course. Rouhani represents a wing of the regime that is arguing for reforms from the top to prevent revolution from below. As a result, the regime has been forced to take some limited steps to ease the pressure, especially on the youth and the middle class. This is the reason why there are at present massive illusions in Rouhani. But with the easing of the democratic problems the economic ones will come to the fore.

The regime is trying to reach a deal with the Americans, in order to open up the market and also win some concessions, especially in the weakened oil infrastructure. Such a deal, if it is concluded, will not change the general situation of the masses. The only way for the Iranian bourgeoisie to get out of their crisis is through increased exploitation of the workers. But this will only pour oil on the flames. Every step of opening up the atmosphere will only fuel the self-organisation of the workers and the youth and will prepare for big revolutionary explosions in the future.

This “opening” provides new opportunities for the opposition and the Left. Some opposition (and even some leftist) newspapers have begun to appear. Gradually the forces of the opposition are beginning to re-emerge. The youth is open to socialist and revolutionary ideas. It is true that there are illusions in Rouhani, but these will not long survive the acid test of experience. The masses will have to go through the school of bourgeois democracy in order to draw the necessary conclusions, but draw them they will.

Inequality and the concentration of capital

Marx’s prediction that the development of capitalism would inevitably lead to the concentration of greater and greater wealth in fewer and fewer hands has been entirely vindicated by events. “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery at the opposite pole.” he wrote in volume one of Capital. That is precisely the situation we now find ourselves in. Everywhere there has been a sharp increase in inequality.

The sums involved are immense. Between 1993 and 2011, in the US, average incomes grew a modest 13.1 percent in total. But the average income of the poorest 99 percent—that is, everyone up to families making about $370,000 a year—grew by only 5.8 percent. That gap is a measure of just how much the top 1 percent are making. Workers’ share of US national income was 62 percent before the recession. It is now about 59 percent of GDP. Average household incomes are lower than before the recession as inequality rises.

It is a glaring paradox that the US stock market has risen by more than 50 per cent since the crisis, while median earnings have declined. Obscene wealth begets political power: plutocrats can buy up newspapers and television channels and fund political campaigns, parties and lobbying. In the USA, one has to be a millionaire to be President, and in must addition have the backing of many billionaires. Democracy can be bought and sold to the advantage of the highest bidder.

The myth of social mobility has been exposed for what it is: a cynical lie. Rich parents have rich children. The ruling class is a self-perpetuating elite that is entirely divorced from the rest of society. Access to higher education is increasingly expensive. Graduates find themselves saddled with enormous debts averaging $25,000 per student and are often unable to find jobs in the career of their choice—if they can find a job at all. The ladder to advancement has been kicked away. Hundreds of thousands of university graduates are serving hamburgers in McDonald’s or stocking shelves in supermarkets. The situation confronting US youth today is statistically similar to that faced by youth in the Arab world before the explosion of the Tunisian and Egyptian Revolutions.

The American dream has turned into the American nightmare. 47 million Americans are forced to resort to food stamps in order to have food for the end of the month. The growing sense of anger at this injustice was expressed in the slogan of the Occupy Movement in the USA: “We are the 99%”. The dangers in this situation are clear to the more far-sighted strategists of Capital.

An abysm between the classes

The masses are prepared to make sacrifices on condition that the cause is just and the sacrifices are the same for all. But nobody is willing to make sacrifices to save the bankers, and there is no question of equality of sacrifice. The bankers pocket the money generously doled out by the taxpayer (or rather, by the government, since nobody has asked the taxpayers’ opinion), paying themselves huge bonuses.

In the midst of a crisis, the rich get richer and the poor get poorer. Credit Suisse has published a chart showing the increase in the number of dollar millionaires (based on total assets, mid-2012 to mid 2013).

Spain: 402,000 (+ 13.2%)

US: 13,210,000 (+ 14.6%)

France: 2,210,000 (+ 14.9%)

Germany: 1,730,000 (+ 14.6%)

UK: 1,520,000 (+ 8.2%)

Italy: 1,440,000 (+ 9.5%)

China: 1,120,000 (+ 8.7%)

Canada: 993,000 (+ 4.7%)

Another Credit Suisse report published some interesting figures on unequal distribution of wealth. It revealed that at the top end, 32 million people control $98.7 trillion. That means that 41 percent of the world’s wealth is in the hands of 0.7 percent of the total adult population. Those with a personal fortune of $100,000 to $1 million account for 7.7 percent of the population, controlling some $101.8 trillion, representing 42.3 percent of the world’s wealth.

At the other extreme, 3.2 billion people control a mere $7.3 trillion. This means that 68.7 percent of the world’s adult population control just 3 percent of its wealth. This means that the richest 0.7 percent of the world's adult population have a combined personal wealth 14 times larger than the poorest 68 percent. These figures confirm Marx’s prediction concerning the concentration of Capital:

“Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.” (Capital vol.1, chapter 25)

“Concentrated economics”

Lenin pointed out that politics is concentrated economics. For a whole period, at least in the advanced capitalist countries, capitalism seemed to be “delivering the goods”. The generation that grew up in the USA and Europe during the decades that followed the Second World War enjoyed the benefits of an unparalleled economic upswing: full employment, rising living standards and reforms.

This was the classical period of reformism in Europe. The capitalists could afford to permit reforms on the basis of an expanding economy and big profits. But that is no longer the case. The real programme of the bourgeoisie is to abolish the welfare state altogether, forcing the unemployed to work for any wages the employers choose to offer. That is to say, to go back to the times of Marx and Dickens. Only the power of organised labour prevents them from fully carrying out this social counter-revolution.

The perspective is one of years of cuts, austerity and falling living standards. This is a finished recipe for class struggle everywhere. The bourgeoisie demands the liquidation of debt, balanced budgets, the slashing of “wasteful” social spending (that is to say, spending on schools, hospitals and pensions, but not, of course, handouts to the banks). They argue, like true sophists, that although “in the short run”, such measures must lead to a significant economic contraction and a sharp fall in living standards (for some), in the long term, they would magically, create the foundation for “a sustainable recovery”. To which old Keynes would have answered: “In the long run we are all dead”.

So precarious is the situation that anything could trigger a major crisis; this is true of the economy (see the government shutdown in the USA and also growing debt in Europe) but also of society as a whole. Class struggle could also erupt through some event or other (the Belgian firefighters).

The question is posed for the bourgeoisie: how to govern in such a crisis situation? In many countries of Europe, the political impasse manifests itself in unstable coalitions and hung parliaments. The institutions of bourgeois parliamentary democracy are being tested to their limits.

The growth of abstention is a phenomenon that indicates growing disaffection with all the existing parties. This is hardly surprising, given the conduct of the labour leaders. Even when they are in opposition, the Social Democrats continue to support the general policy of cuts and austerity. This was shown clearly in the case of the Swedish SDP, the British Labour Party, the German SPD, the Spanish PSOE and the Pasok in Greece. It is this that produces moods of disappointment and apathy.

In Germany too there is a growing tendency towards abstentionism. Merkel won the elections, but even then she did not win a majority, and needed the SPD for a “grand coalition” government. 40% of the German electorate is not represented by any party in parliament; Die Linke's vote fell from its peak of around 12% to just below 9%. But nature abhors a vacuum, and the formation of a SPD-CDU coalition means Die Linke is the only real opposition and can begin to pick up support.

As a result, in several countries we have seen the rise of new parties: Greens (in Sweden), populists in Iceland and Italy (Grillo), “pirate parties” (Sweden, Germany, Iceland), and the rise of far-right parties (Greece, Sweden, Norway, France) and the anti-EU UKIP in Britain. All this represents a ferment in society, a deep malaise and dissatisfaction with the existing political order.

In Europe there is a growing discrediting of the institutions of bourgeois democracy, particularly in those countries which are hardest hit by the crisis. The old established two-party system (right wing vs. Social Democracy) is in crisis. Some of that discontent is being capitalised by parties to the left of Social Democracy, as witnessed by the growth of Syriza, IU and the French FdG. In Italy, where such a thing did not exist, the “5 star movement” of Grillo (a confused petty-bourgeois protest movement) has temporarily filled that void.

Still, even these parties do not offer a real alternative to the crisis of capitalism and are therefore not growing as fast as they could do if they reflected even partially the mood of anger in society. However, finding no echo in the reformist parties, the discontent of the masses is reflected in the political arena by an increase in abstention or spoilt ballots. In Spain, in 2008, the PP and PSOE concentrated 83% of the votes on a 75% turnout. Today, opinion polls give them barely 50% on a much lower turnout (around 50% now declare they will either not vote, or vote blank or don't know who will they vote—a record figure).

In Portugal we see a similar situation emerging from the recent municipal elections. Abstention increased by 550,000; spoilt and blank ballots doubled, with an increase of 170,000. The ruling right-wing coalition lost 600,000 votes; the Social Democratic PS in “opposition” lost 270,000; the Communist PCP gained barely 13,000 votes; while the left-wing BE lost 45,000 votes.

The mass organizations

The central problem is one of leadership. The labour leaders—both in the political parties and the unions, are living in the past. They have not understood the nature of the present crisis and dream of the possibility of returning to the “good old days”. They are organically incapable of breaking with the bourgeoisie and leading a serious struggle even to defend the conquests of the past, still less to fight for an improvement in living standards.

There is a sharp contrast between the burning anger of the working class and the passivity and helplessness of its leaders. The mass organisations, in general, are still on quite a low level of activity. Thus, there is no real pressure on the leaders to prevent them going even further to the right. This has been the general tendency in the last period. The degeneration of all the leaderships has reached unparalleled depths. It is a shocking fact that the very organizations that were created by the working class to change society have become transformed into powerful obstacles in the path of social transformation.

Historically, it is the role of the Social Democrats to demoralise the workers and push the middle class into the arms of reaction. Having long ago abandoned any pretence of standing for socialism, they address their speeches to the bankers and capitalists, adopting a “moderate” and “respectable” tone. They try to persuade the ruling class that they are fit to assume high office in the State. In order to prove their credentials to the bourgeoisie as reliable “statesmen” (and women), they are even more zealous than the Conservatives in carrying out cuts and counter reforms (always under the flag of “reform”).

The left reformists, who dominated the Socialist parties in Europe in the 1970s, have been reduced to a shadow of their former selves. Lacking a firm base in ideology or theory, they trail miserably behind the right wing. The latter are more confident because they feel they have the support of big business. By contrast, the Lefts have no confidence either in the working class or in themselves. The left-reformists in the unions are no better than their political counterparts. They stand condemned and have failed even on the most elementary grounds of consistently struggling to defend wages, conditions and trade union rights.

A whole series of “Left” governments have been ejected after carrying out cuts: Spain, Iceland, Norway, Greece and, somewhat earlier, Italy. Others have seen their support collapse and are likely to lose power in the next election (Denmark, France, Ireland). The Irish Labour Party was riding high in the opinion polls before it entered a bourgeois coalition that is carrying out cuts. Its support has collapsed, falling from 24% to 4%.

In Greece, the socialist party, Pasok, which had a mass base and at times votes of close to 50%, has seen its vote collapse as a result of carrying out the policies dictated by the ruling class and the EU. It was replaced first by the “national” government of Papademos, then joined the coalition with the right-winger Samaras. But the most important factor has been the rapid rise of Syriza, which originally struggled to obtain 4 or 5% and at one point reached 30% in the opinion polls.

However, the mass organizations, even the most degenerate, will at a certain stage inevitably reflect the pressure of the masses. In the coming period there will be violent swings of public opinion to the left—and to the right. We must be prepared for this and explain its real significance. In seeking a way out of the crisis, the masses will test—and discard—one party and leader after another. But a constant feature is the rejection of whoever has been in government carrying out an austerity programme.

In Britain, there are some indications that pressure from below (particularly from the unions) is forcing Miliband to distance himself from the Tories and Liberals. Miliband, however timidly, is reflecting the growing public anger against big business and the banks. Once in power the reformist leaders will be under extreme pressure from both the ruling class and the masses. They will be crushed between two millstones. There will be splits to the right and left. In some cases they can be destroyed altogether (the PRC in Italy and possibly the Pasok in Greece). But in every case they will enter into crisis.

As the crisis deepens, left tendencies will begin to crystallize inside the mass workers’ parties and unions. The Marxist Tendency must follow the internal life of the mass organizations closely and strive to reach and win over the leftward moving workers and youth who are looking for an alternative.

However, our ability to intervene effectively in the future will be determined by our success in building the Marxist Tendency today. It is not at all the same intervening in the mass movement with 20 or 50 cadres as with 500 or 1,000. Quality must be transformed into quantity, so that quantity in turn can be transformed into a qualitatively higher level. In order to move masses, it is necessary to possess a lever, and that lever can only be a strong and numerous Marxist tendency.

The unions

The unions are the most basic organizations of the class. In a crisis, the workers feel the need for the unions even more than in “normal” periods. In the industrial field there have been some very radical struggles and conflicts and whenever the trade union leaders have given a lead, in the form of general strikes, sectorial strikes, etc., the workers have responded massively. The problem is that the trade union leaders are completely impotent when faced with the crisis of capitalism as they really have no alternative (other than a mild form of Keynesian stimulus).

In Spain. there was an all-out strike of the teachers in the Balearic Islands which lasted for three weeks and attracted mass popular support (with a demonstration in Palma of around 100,000 on an island with a total population of around 800,000!). The strike was conducted with traditional class struggle methods which had been lost in the last period: mass assemblies, elected delegates, support from parents and students and a strike fund. However, the trade union leaders left the Balearic teachers on their own, refusing to spread the struggle beyond the teachers and to the mainland, and the movement had to retreat, defeated by exhaustion.

In these conditions it is not surprising that many workers are questioning the validity of 24-hour general strikes called in isolation, without a sustained plan of struggle by the trade union leaders. In fact, these are being used by the leaders as a means of blowing off steam. In Greece, the weapon of the one-day general strike has now become counterproductive. Calls for such actions are met with scepticism by the workers who understand that more drastic action is necessary. In the conditions of Greece, what is needed is an all-out political general strike to bring down the government.

We see both in the political and industrial front an accumulation of anger and discontent which so far finds no clear channel of expression. In Spain, Portugal, Greece, Italy, hundreds of thousands of youth are forced to emigrate in a return to a situation their parents thought they had left behind.

There are constant attacks on public health care and education systems, a growing epidemic of unemployment, particularly amongst the youth, the scandal of evictions and repossessions side by side with large numbers of empty flats and homes, a growing number of people living on the streets, many of whom thought of themselves as “middle class”, being pushed under the poverty line, etc.

Under these circumstances the workers more than ever see the unions as their first line of defence. All of these pressures will have to come to the surface, in a combination of spontaneous protest movements, explosions of anger, which will eventually have an impact in the mass organisations.

The first stages of mass radicalisation will be reflected in strikes, general strikes and mass demonstrations. We have already seen this in Greece, Spain and Portugal. But given the depth of the crisis, these actions alone cannot succeed in preventing new attacks on living standards.

Even in Belgium, where the militant action of the firefighters and railway workers forced the government to retreat, this will only be a temporary victory. What the government concedes with the left hand, they will take back with the right. In Greece, there have been close to thirty general strikes, but the government continues to attack.

Gradually, the workers learn through experience that more radical measures are necessary. They begin to draw revolutionary conclusions. Trotsky explained the importance of transitional demands as a means of raising the consciousness of the workers to the level demanded by history. But he also pointed out that in a situation of deep crisis, such demands are not enough:

“Of course the sliding scale and workers’ of self-defence are not enough. These are only the first steps necessary to protect workers from starvation and from the fascists’ knives. These are urgent and necessary means of self-defence. But by themselves they will not resolve the problem. The main task is to pave the way to for a better economic system, for a more just, rational and decent use of the productive forces in the interests of all the people.

“This can’t be achieved by ordinary, ‘normal’, routine methods of the trade unions. You cannot disagree with this, for in the conditions of capitalist decline insulated unions turn out to be incapable of halting even the further deterioration of the workers’ conditions. More decisive and deep-going methods are necessary. The bourgeoisie, which owns the means of production and possesses state power, has brought the entire economy to a state of total and hopeless disarray. It is necessary to proclaim the bourgeoisie bankrupt and to transfer the economy into fresh and honest hands, that is, into the hands of the workers themselves”. (Trotsky, Discussion with a CIO organiser, 29 September 1938)

The role of the youth

One of the main features of the present situation is the persistence of high levels of unemployment and under-employment, especially among young people. This is not the reserve army of unemployed of which Marx spoke. It is permanent, structural unemployment, organic unemployment that is like a poisonous ulcer gnawing at the entrails of society and corroding it from within.

The worst effects of unemployment are to be found in the youth, which has to bear the heaviest burden of the capitalist crisis. Youthful hopes and aspirations come up against an impenetrable barrier. This is all the more intolerable when an increasing number of the unemployed are highly educated. This creates a very combustible and volatile mixture.

This is the first generation of young people who cannot expect a better standard of living than their parents. They have been robbed of a future. A whole generation of youth is being sacrificed on the altar of Capital. Between Brazil and Turkey there are, of course, differences. But there are also common features that helped fuel discontent. The same features will nurture similar protests elsewhere. One important factor was youth unemployment.

This phenomenon is not confined to the poorer countries of Latin America, the Middle East and Asia. Unemployment and poverty are an explosive combination that can ignite at any time, in any country. Youth unemployment was a big factor in the so-called Arab Spring. High levels of youth unemployment in Europe can have a similar radicalising effect, Already, youth radicalisation is a generalised phenomenon to one degree or another across Europe.

In Britain, a wave of radicalisation among the students was followed by an explosion of rioting by unemployed youth in all the big cities that shook the establishment. In Greece, the big movements of the working class were preceded by a major movement of the school students. In Spain and the USA we had the Occupy movement and indignados, which were overwhelmingly composed of the youth. There are many historical precedents for this. The Russian Revolution of 1905 was preceded by the student demonstrations of 1900 and 1901. The May Days in France in 1968 were sparked off by student demonstrations that were brutally repressed by the police.

Lenin said: “He who has the youth has the future”. We must at all costs find a road to the revolutionary youth, giving a conscious and organized expression to their instinctive desire to fight injustice and oppression and win a better world. The success or failure of the IMT depends to a great extent on our ability to achieve this end.

Are the conditions ripe for revolution?

We are moving into an entirely new situation on a global scale. This is clear from the events of the last 12 months alone. Clouds of tear gas fill the streets of Istanbul. Police truncheons crack skulls in São Paolo and 17 million people overthrow an Egyptian president. Protests have erupted in Bulgaria. This is only the start of a wave of political discontent in the developing world, which is pregnant with revolutionary potential.

Dialectics teaches us that sooner or later everything turns into its opposite. This dialectical law has been strikingly vindicated by the events of the last twelve months.

Let us remind ourselves that Turkey and Brazil were until recently considered two of the “economic miracles”. The possibility of a revolutionary upsurge in those countries did not even enter the heads of the strategists of capital. But then, neither did the possibility of the revolutionary overthrow of Mubarak in Egypt or of Ben Ali in Tunisia.

Cynics and sceptics are to be found everywhere in plentiful numbers. They are the flotsam and jetsam of the defeats of the past, prematurely aged old men and women who have lost all confidence in the working class, socialism and themselves. The professional cynics eke out a miserable existence on the fringes of the workers’ movement, and sometimes within it. Their principal aim in life is to moan and grumble about the workers and youth, to belittle their achievements and exaggerate their faults.

Such specimens are to be found above all in the ranks of the former Stalinists. Since they have long since abandoned all hope in the socialist revolution, these wretched creatures are only concerned with one thing: to disseminate their toxic brand of pessimism and scepticism among the youth, to demoralise them and discourage them from participating in the revolutionary movement.

These, people who Trotsky correctly described as gangrenous sceptics, argue that the working class is not ready for socialism, that the conditions are not ripe, etc. It goes without saying that for such individuals the conditions for socialism will never be ripe. Having established in their own minds some impossible standard of revolutionary “maturity”, they can then sit back comfortably in their armchairs and do—nothing.

It is necessary to underline the fundamental idea that the main feature of a revolution is the entry of the masses onto the stage of history. In 1938, Trotsky wrote:

“All talk to the effect that historical conditions have not yet ‘ripened’ for socialism is the product of ignorance or conscious deception. The objective prerequisites for the proletarian revolution have not only ‘ripened’; they have begun to get somewhat rotten. Without a socialist revolution, in the next historical period at that, a catastrophe threatens the whole culture of mankind. The turn is now to the proletariat, i.e., chiefly to its revolutionary vanguard. The historical crisis of mankind is reduced to the crisis of the revolutionary leadership”. (Trotsky, The Transitional Program, May-June 1938)

These lines are completely relevant to the present situation on a world scale. Indeed, they seem as though they were written only yesterday!

Against the cynics and sceptics who deny the revolutionary role of the proletariat, we will always bring to the fore the revolutionary potential of the workers and youth, which is constantly reaffirmed by events. The marvellous revolutionary movements in Turkey, Brazil and Egypt, the general strikes in Greece and Spain, the mass movement in Portugal that almost led to the overthrow of the government, the general strikes in India and Indonesia, are all clear indications that the world socialist revolution has begun.

However, the fact that a revolution has begun does not mean that it will be immediately successful. That depends on many factors, the most important of which is the quality of the leadership. Hegel wrote:

“When we want to see an oak with all its vigour of trunk, its spreading branches, and mass of foliage, we are not satisfied to be shown an acorn instead.” (Hegel, The Phenomenology of Mind, Preface).

What we have here is only the early anticipation of socialist revolution. It is the first reawakening of the masses after a long period in which the class struggle had been blunted in many countries. An athlete, after a long period of inactivity, needs time to stretch his or her limbs, to “warm up” and acquire the necessary ability to engage in more serious activities. Likewise, the working class needs time to acquire the necessary experience to raise itself to the level demanded by history.

As a general rule, the masses learn from experience. This is sometimes painful and always slow. This learning process would be rendered both quicker and less painful if there existed a powerful Marxist party with a far-sighted leadership like that of Lenin and Trotsky. If there had been the equivalent of the Bolshevik party in Egypt last June, who can doubt that the revolutionary workers and youth could have taken power easily.

Peripheral European diplomats talk darkly of a potential “crisis of democracy”, and it is a fact that the institutions of bourgeois democracy are being tested to breaking point. In the governments of Europe, above all in Berlin, there is a persistent worry that the imposition of austerity will cause social conflict on such a scale as to represent a threat to the existing social order.

The real reason why the bourgeois were so horrified by the overthrow of Morsi in Egypt, is that they fear that such things can happen in Europe. The FT has drawn an uncomfortable parallel with the revolutionary year 1848: “It [...] reminds me—of 1848. Metternich sneering out of the window at the irrelevant mob, a few hours before his unceremonious overthrow, Guizot unable to breathe with shock as he resigns his ministry, Thiers, prime minister for one day, suffering a bout of 19th Century Tourette's in his carriage, hounded by the masses…”

The bourgeois economists admit that the perspective for capitalism is of twenty years of austerity. That means two decades of heightened class struggle, with the inevitable ebbs and flows. Moments of great upsurge will be followed by periods of exhaustion, disappointment and disorientation, defeats, even of reaction. But in the present climate, every lull will only be the prelude to new and more explosive struggles. Sooner or later, in one country or another, the question of power will be posed. The question is whether, in the decisive moment, the subjective factor will be sufficiently strong to provide the necessary leadership.

Unbearable tensions are building up at all levels. The source of the general malaise in society is not only the economic factors: unemployment and falling living standards. It reflects disenchantment with all the existing institutions of capitalist society: politicians, the Church, the media, bankers, the police, the legal system etc. It is also affected by events on a world scale (Iraq, Afghanistan, Syria, etc.)

The conditions are not the same everywhere. For instance, the situation in Greece is more advanced than in Germany. But everywhere, not far beneath the surface, there is a seething discontent, a feeling that society is going badly wrong, that this is intolerable and that the existing parties and leaders do not represent us. The objective conditions for socialist revolution are either mature, or else are rapidly maturing. But the subjective factor is missing. As Trotsky said long ago, the problem is a problem of leadership.

For a whole series of objective historical reasons, the movement has been thrown back; the forces of genuine Marxism have been reduced to a small minority, isolated from the masses. That is the central problem, and the central contradiction that has to be resolved. It is necessary to recruit the necessary cadres, to train and integrate them into the organization, and orient them to the mass workers’ organizations.

This takes time. We will have some time because of the slowness of the process. But we do not have all the time in the world. It is necessary to approach the task of building the forces of Marxism with a sense of urgency, to understand that the road to big victories in the future is prepared by a series of small successes in the present. We have the necessary ideas. Our perspectives have been brilliantly confirmed by the march of events. We must now carry these ideas into the working class and the youth. The road to the workers and youth is wide open. Let us march forward with confidence.